You Will NEVER Get Rich as an Employee (here’s how to get ahead)

June 8, 2024

You Will NEVER Get Rich as an Employee (here’s how to get ahead)

MrBigMoney Big Money Mindset, How To Think Like A Big Money Millionaire $100k salary, asset acquisition, assets vs liabilities, building wealth, financial freedom, financial growth, financial independence, financial planning, financial tips, high tax, inflation, modern wealth, money management, net worth, rich vs wealthy, salary vs wealth, smart money, strategic finance, wealth, wealth secrets 23 Comments

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a lot of you listening have goals to increase your wealth by increasing your salary but unfortunately that is not how it works because you’re not going to be rich as an employee it sure looks that way yeah it’s tough pill to follow swallow you know honestly yeah I think um unfortunately as most of you guys know inflation is killing everyone from you know it’s way P there’s 22 consecutive months that inflation surpassed wage growth that’s almost two years that’s that means that things are getting more expensive at the same rate of your wage increases and so you know it’s interesting that 100 Grand a year is no longer a lot of money I remember going up like that was kind of a big goal right oh yeah even in the game of life I used to play when I was younger 100 Grand that was like the top salary was like if you were getting 100 Grand salary you could just afford 20 kids and all the things you know 20 kids like remember when you spin that little thing and then you put the kids in the car there’d be like a liability yeah that’s that’s actually the truth it was a interesting game but I remember the 100 Grand used to be kind of a big deal you know I remember oh yeah I’m making 100 Grand I’m making 100 Grand that’s that’s boom gone it’s interesting I was I was looking at inflation in getting ready for this video and I think that if wages adjusted with inflation you know like Biden says at least um you know they would be about 13 bucks an hour that’s essentially um that’s that that’s what it would be actually $12.75 to be exact but the um the Seattle where I’m from the King County city council is actually considering uh $20.29 as minimum wage and I ran that out that’s 42 Grand right that’s 42 Grand minimum wage so that’s proposed but that you think about how bad things are getting for people it’s uh you know we’re starting to see it in our in our uh rentals you know I’ve been in this business for 30 years I’ve never seen anything like what I’m seeing now with people having a tough time paying right and and also you know even for a new car you know um the consumer watch came out and said that you need to make an 100 Grand a year as a household to afford a new car right now that’s insane 100 Grand a year yeah because the payments are typically over $1,000 a month well wait a second so it used to be that houses were out of your reach but now cars might be out of your reach yeah new cars so the average uh time people are keeping cars now are uh over seven years the other thing I heard is that it makes sense when after I say it anybody who bought a car let’s say before rates went up they have trapped Equity or maybe they even below um just like a lot of people are with houses so imagine maybe you spent 30 $50,000 on a car and you your rate was let’s say 4% or 3% now rates are significantly higher than that as you as we all know so you can’t really get out of that you can’t really upgrade so so new cars are kind of taking in the chin right now oddly enough because a lot of people are sitting on this on the old cars and one of the industries that actually uh could emerge is is what they’re saying it’s going to be Auto Repair which makes sense people are going to keep their cars longer because of um you know where they sit absolutely and so I think the whole purpose of what we’re discussing here is that you know just trying to make a higher salary isn’t going to do it for you you know it’ll help I mean if you’re making 60 Grand and you get these incremental raises I mean every little bit helps but we’re going into Times of high inflation your salary is not going to keep up if we do go into stagflation like we’ve talked about on this channel salaries could even go down yeah and the one thing I want everyone to understand is you know maybe you can go in if you’re an exceptional employee and you know negotiate some kind of big increase first of all most people don’t do that right if you’re in a big corporate machine that’s probably not going to be something that you can do but the other thing that’s really interesting to understand is that company itself the corporation itself is also getting squeezed with inflation so what everyone is dealing with right now let like I I’ll give you a great example I played golf last week with a really good friend of mine and he’s got a local produce delivery business in Arizona he has 72 trucks and it’s been in his family for a long time him him and his brother own it he told me that $1 increas in fuel equates to $100,000 a month in fuel cost increase $1 and so you know these are the when when we’re looking at things that are going up it affects businesses and so of course what does he do he buys Less trucks you know he’s not able to pass uh on higher wages to some of his people when he’s getting killed on fuel and so you know the same thing happening with insurance and so there’s a lot of things that going up from the corporate level and while May a lot of you might not care it matters when you’re sitting across a desk from somebody that’s actually feeling the inflationary pressures as well so this is why we’re saying that you could be in a scenario it it might not just be you trying to trying to get more wages it also means that your employer is getting squeezed too yeah absolutely and and you know we’re seeing a bunch of layoffs right now um it’s interesting because we just did that stagflation in you know um topic a couple weeks ago and now we’re starting to see those layoffs that we kind of talked about in a lot of your different retailers I just watched a couple videos on AI now first of all there’s a lot of like AI powered what does that even mean like you know I I was looking at LinkedIn like AI power great like who who you know all of a sudden you know but you want to you want to really take a look at what the some of this learning is doing that’s replacing jobs so it’s happening it’s coming you know in two years is going to be a game changer everybody’s now starting to figure it out some people have really figured it out and and what what’s happening AI was supposed to be something that made the employee more efficient better um but what’s happening is employers are looking at ways to cut costs that’s the bottom line so this is why Elon Musk is actually suing open AI because he says it’s not open and and what’s interesting and this is one piece I know we’re diverting a little bit away from this 100 Grand a year thing but there’s all kinds of things chipping away at the worker and what what you know the the industry that’s going to continue to emerge is going to be that that Tradesman you know that that blue collar you know because those are things you can’t um replace easily you know you’re not going to have ai come over and fix your air conditioning or anything like that so you know this is coming right at the white collar and and uh this is partially um a result of the education system you know cranking out people you know almost you know just like a machine it’s basically a huge incredible business um and um you know so everybody comes out and what they all want is the wealth management position the middle management positions and all that kind of stuff and this is all coming down it’s starting to get squeezed right now and then AI just adds another component to it right and then also let’s take a look at the you know uh debt right now let’s take a look at Consumer Debt I think this is important they stay on here for a second Jerry now guys this these are Consumer loans credit card loans um the gray areas are recessions but all the way to the left that’s 1 trillion when it says 1,000 that’s 1 trillion so you can see we we were way past $1 trillion doll in in Consumer Debt there’s a reason why people are in debt and I think this is the point and um so when you when you got well over into the trillions now of Consumer Debt at 20% rates and plus it just keeps people further and further and further from being able to pay down principle and as we all know what most people are doing is they’re making their minimum payments a lot of times and so the the Consumer Debt is one other piece of um you know what people have done is the inflation kicked in and then they started to they didn’t want to um pull back on their lifestyle so this is the result of that uh it’s a very interesting thing um and then the next uh chart that I want you to look at is personal savings rate and this is another really important one so this is historically what the look at all the way back into the 60s I mean it was always in the 10% range until about the 90s it bounced around as you guys know and I I can see where it got it got low in the into the into the mid 80s there but the personal savings rate the reason that you see the spike over there in 2020 that was all the stimy checks the stimulus money all the money that the government gave everybody that increased personal savings rate now that was good except they blew right through it and uh now it’s obviously down somewhere between 3 and 4% and of course now the opposite is happening so they blew through people blew through savings and then they started to load up on the credit card at the same time right because a lot of it had to do with this inflation right everything was costing more money 100% yeah and and so people are people are having a tough time it’s interesting I looked I went back and looked J go back and pull that up real quick if you would uh just one second if you had a 100 Grand in 1990 now this is going back guys so so okay I’m old you if you had a 100 Grand in 1990 and you adjusted it for today the it would actually be need to be $239,000 today wow that’s the difference and that’s what inflation does so if you had you it works the opposite as well you know the dollar has been eroding over time even the FED wants a 2% inflation rate okay I mean it’s not there but obviously it’s been much much higher over the last couple years but even the fed has an has an inflation rate so so for those of you who have been saving at 1% you are getting killed because again going back to the 100 Grand it gets adjusted with inflation to 239 today now that’s a long time obviously it’s 34 years or something so I get that but this is the point the point is is all if you go 34 years ahead now it you’re going to be in the exact same scenario and and and this is kind of what we’re saying well that’s that’s a good thing to bring up right because to your point that’s basically somebody’s working career So within their working career you know they would have to earn you know um 150% of their income in order to just keep up with inflation right right and that was just in the regular pace of inflation not the kind of inflation we’re having right now yeah that the key is obviously get Mak sure your money is in these in inflation hedged assets whatever that might be for you you know I’m not going to Advocate anything I’m not going to say go buy oil and gas or water or or silver and gold or even real estate I’m just telling you that there are things that move with inflation period and one of them is not holding dollars so let’s talk about that though so I think that that is something no matter what kind of salary you’re making right now whether you’re making 50 Grand a year or 100 Grand a year or 200 Grand a year you need to be investing in these assets that are moving with inflation because what people do need to understand is we are absolutely going into a high inflationary period we’re going to see that with the fed you know they’re trying to get inflation under control um but realistically they’re probably going to accept some kind of higher inflation that’s above the 2% so um you need to be looking at those assets that do move with inflation and your salary is not one of them yeah so just look at what do people want and need right like just invest in those things and and I’ll tell you you know one of those is obviously housing clearly the math is simple you know we’re we’re millions of units under supplied that’s clear and um you know right now rents are going to be soft because of the stuff that got started you know two years ago but after that when interest rates went up people stopped building so so it’s going to go off a cliff again and you’re going to start to see rent growth on the on the rental side but also on the single family side maybe you guys can tell me where there’s some relief in sight because I just don’t see it I don’t see when you’re at 50% historical listings you know on the MLS what’s GNA what’s going to make prices go down like you know what is it you know it’s going to have to be some kind of massive loan defaults it’s a supply problem more Supply uh makes makes pricing go down that’s there’s the number one thing that drives housing it’s people and um if people are holding on to the the rates that they have and the equity in their home and they’re feeling some some people are still feeling wealthy because they have equity in their home and yeah thank God that’s not going to go away cuz I don’t think it will not like in 20 8 where I watched it all disappear um and um you know people people got through it they had to adjust but this time’s going to be a little bit different they’re but they’re it’s trapped Equity it doesn’t mean anything unless they actually sell right but that’s where you kind of get into you know your net worth right um versus just High income so you know I think that’s a big thing to distinguish you know um people that earn higher salaries they high income but they’re not necessarily High net worth I know lots of doctors like that I know a ton of doctors that are high income and they pay high tax of course like in the 40s 40% um and they uh live a lifestyle they have nice houses nice cars and this kind of stuff I’m not saying they shouldn’t they work their butts off to get where they are but their net worth is not very good that’s the thing so they have to they’re on the machine they’re on the wheel they’re in the rat race whatever you want to call it um they have to kaching it’s like passing go and Monopoly they have to do it and um you know you can be outside of the system you can get secondary income you know as you guys know like even this YouTube channel that I’m doing this kcom that I’m doing I started it during the pandemic it’s another source of Revenue I mean you guys are going to laugh but it’s this is this is the truth my very first first few videos that I posted I didn’t even realize that YouTube paid like said they I found out that that that there was money coming into this account that that somebody had set up for my YouTube the point is there’s a there’s a revenue stream it’s outside of my business and then I I actually have a staff what do we have five five six people here um that are getting paid from that and it’s a revenue stream that I created from nothing and you can do the same thing and I have friends that do this with all kinds of things these side hustles are real you need to have other sources and you can do it part-time you can do it in the evening you can do it on the weekends some of you might even be able to do it while you’re still holding another full-time position if you’re part-time then there’s really no excuse so there’s lots of ways but more buckets of money more income coming in from other different sources you do not want to rely on a W2 from one person based potential wage growth when you don’t even know the financial situation that that employer is actually sitting in and then so with these assets I think we need to focus on that because people need to understand that right so uh rentals are you know housing is a good one yeah at at the right time you have to buy correctly but yes obviously guys were severely undersupplied with with rentals period just look just look at realtor.com National home builder National apartment association.com look at any of those and you’ll see the study after study after any even Fanny May and Freddy Mac on their own website show were massively massively under supplied which all started from the 2008 crash essentially and I know that’s a long time of you a lot time ago for some of you um but it’s a fact you think about that 10-year period when when when um when the economy was crashing some of you might even remember or might not even been born that was a rough time the the banks were not lending to build so this 10year period went by where there was hardly any Supply out it yet people still kept being born and um you know so it’s birth minus death plus immigration those are kind of the big ones those you know we had more and more and more and more people that’s the rent growth that’s the stuff we just saw um and we never and then what happened is we kind of got there and then the FED raised rates and um you know this year we’re delivering a lot of units over a million to the economy which is good but it’s just a dent it just is not going to get us back so the the reality of the long-term view for for for having an um for real estate and buying something that’s asset uh hedged the assets heds to inflation because debt is fixed when you can fix debt at a certain am amount and inflation um pays it off for you then you should do that well and I think that that’s the other side of the equation that you have to look at too and this is something you know I learned from you know you and Robert is more the the actual loans are benefited from inflation so not just the assets you have an asset that’s moving with inflation and debt that’s getting erased by inflation well guys you’re buying something and your tenants paying it off for you like why would you do that like you know what I mean look that’s number one so the tenant is paying it down number one number two you get tax benefits number three if you fix your rate you hedge inflation so you’ve got that and so you have an asset that you bought at today’s prices pre whatever inflation is going to be that’s being paid off by somebody else if you manage it well if you keep it occupied and you get tax benefits and hopefully you get cash flow we haven’t talked about that the passive income which is kind of the whole point so that is what you should be doing um and you know the thing about oil and gas and thing about silver and gold and some of those other things and I’m in all of those things including water it that there’s no cash flow you know they’re are great Commodities to have so so you know for me I like to have cash flow I like to invest in things that actually produce cash flow um and I do have uh you know there’s a capital gain strategy and a capital and a cash flow strategy and most people I would say the majority of people want capital gains they want to buy low sell High that’s for whatever reason what they want I don’t I want to buy low and hold in cash flow that’s what I want to do and I and I it’s just a tried and true model I learned it from um you know mentors that are that are long gone that and you go guys this this this model has been around forever and it’s going to stay around forever no matter uh no matter what Craig said if you don’t find a way to make money while you sleep you’ll work until you die yeah yeah mailbox money is important it’s and that’s I got to tell you like I I I always brag on my sister because I’m really proud of her you know she was a bookkeeper at the Everett Clinic which is I grew up in ever Washington and um you know she didn’t go to college and um she was in bookkeeping and making a moderate moderate salary um and uh enjoyed it for years and years and years and her husband was working in a factory there called kiberly Clark and over the years they you know when you were a bookkeeper at the ever Clinic you you don’t really have you know uh the the these big plans that uh you know for Financial Security when you retire so she started buying rentals and she started remember buying them by and she started buying them and then rting them by the room this is way before now rental by the room is now kind of a thing but she started doing and I think at one time she had like 25 or 26 of these things and um I’m like wow just sneaky like one every few years and then next thing you know here’s my sister just that saved saved saved bought these little places and now they’re worth so much money the tenants paid them off and now she 10:31 in this huge piece of land with a restaurant and a building and all this stuff right and she was just a normal employ telling you like I was like wow this is so cool and I you know you don’t have to you know you don’t have to make a tremendous amount of money to be able to to actually shift your mind from just giving your money to somebody else and then hoping it grows over time right yeah it just you know for those down payments on the rentals of course it takes time to build that you know that down payment but it’s not Out Of Reach of somebody that has a middle class salary that can kind of put away a little bit of money every month yeah yeah yeah it’s it’s slow growing but then once you have that asset and that asset’s appreciating and you’re making monthly cash flow on it you’re now keeping up with inflation and your savings which you’re not going to do with a 5% savings rate and it’s it’s it’s an active process too which is also good because there’s a lot of people out there that just hand their money over and look at their quarterly statement and they don’t really even know where it’s invested and you know so there’s active it’s active my sister had to go show up on a Saturday morning and you know and trash out a unit and get it cleaned and and turn it for the next tenant and do a lease and all those kinds of things so so this is not um a business that you can just sit back but um but it certainly worked really well for her at the end you know this is going on 25 30 years she was doing this you know her tenants paid them off tenants paid off these places right like a lot of people don’t think that long term but she did it and now she’s an incredible position of retirement right you know and that’s the whole point she’s I don’t even know how many she had and you’re you’re doing the same thing yeah I mean even if you can just get one think about if you just got one rental in 2019 and of course we’ve had massive growth since then but you’ve doubled your money which you can’t say that if you’ve had a salary you probably haven’t doubled your salary um and it’ll continue to do so you know we’re going to continue to see high growth overall you know in the next 20 30 years so if you can just even get one rental uh under your belt or even just a home for yourself to live in you’re going to have a lot of equity in that home you know um so that should definitely be a goal as you’re you know trying to get out of that employee mindset and trying to kind of get into having assets and having a net worth because that is what what’s going to allow you to retire um so you just have to switch that mindset even if you’re a working employee that’s okay um you’re just never going to retire comfortably in that situation there’s no more pensions there’s you know what I mean so you have to create your own and creating your own through you know metals that move with inflation rental properties even your home while it’s a liability if you’re going to sell it in retirement and cash out some of that it could be helpful to you um more so than just being a renter and an employee and guys this might seem counterintuitive to I I’m a landlord we have 10,000 tenants paying us every month like and I’m telling you you know go be the landlord you know these tenants there are people out there that need rentals want rentals and um and I’m telling you it’s we there’s a financial education that needs to needs to resonate through our economy because people are getting further and further and further away they’re getting a credit card debt their personal savings are down they’re having a tough time paying rent and they’re blaming of course everything including landlords and um so they’re going to have a little bit of a relief for about two years but after that because the the FED raised rates construction’s dropping off and I’m I’m telling you guys uh 2026 late it’s going to game over you’re going to see massive rent increases you’re going to see and the the thing’s going to spike again um Jerry if you want to pull up our Limitless webinar oh yeah this is going to be a good one U make sure you guys check this out this is Friday at 4: p.m first of all before we jump off of the for those of you guys who may or may not know Jeff Snyder uh he’s got the euro dollar University he’s one of our Keynotes at Limitless this year Jeff is so smart that um even guys like George gamon have to like play his stuff over and over and over so this is the guy that everyone looks at um and he’s an incredible guy and and uh he’s going to give everyone kind of a sneak peek of what he sees um and I’m super excited to have Jeff this year so so we’re going to do a webinar to obviously to talk about you know what are you going to be discussing at Limitless which is U Limitless expo.com which is of course the end of a August this year in Dallas Texas so we’re excited to have Jeff here and um uh see see what he has to say I know I have to be super prepared for this one because he’s so darn smart but also take a look at his YouTube channel um he’s all over the Internet and uh you guys are really appreciate it absolutely and then I wanted to address a question on here I don’t know who asked it but they said do you think the presidential election will kind of affect any of this I don’t I got to tell you guys like I don’t I think this is Way Beyond it I I really do like there are maybe some things that could that can be done like uh what I really think’s going to I think that I think we’re heading into the next decade or two where you probably need to go out and take a look at what the government’s going to do for the for the real estate industry because we’re already seeing things like relaxed zoning um I don’t know if you guys are following the Adu accessible dwelling units um California has passed that now there’s also some people that are complaining that they’re not getting them passed or permitted but the the state passed that city of Scott cell just passed that they’re starting and what an Adu is it’s a piece of land with um if you own something you can actually put another accessible dwelling unit on that same piece of land and there’s actually grants and stuff that can allow you so so the point is this the government is looking at how do we add housing how do we assist the the private sector in in working with us to be able to add housing so these are really good signs so I don’t think it matters if it’s red or blue or you know whatever color you want to pick it has I don’t think it matters some of the tax stuff of course you know all that stuff does but at the end of the day you’re going to start to see more programs now I remember there were times when you just think about where Section 8 came from you know everybody throws around the word section 8 um there’s a whole point to that there’s a whole point to tax credits there’s a whole point to affordable housing so the government is already working on a lot of these issues and they have all their bureaucracy to and of course the homeowner and all the people that vote for them don’t want new housing in their area you know so you’re always going to have that fight but at the end of the day I think the government is going to really be um a a significant part of the real estate industry over the next 20 years they’re going to they’re going to offer programs they’re going to offer money they’re going to do Partnerships uh what you called PPP the private Public Partnerships those all are going to you’re going to start to see all that and we’re already starting to see that with HUD which is the Housing and Urban Development where they already do really cool programs for like new development and construction and remodeling and Renovations and stuff like that so you know hopefully that’s what we’ll see but the you know the Genies out of the bottle if on on um on the White House’s own website there’s some stuff on there about affordable housing and money and and and and and all the bills are starting to have this stuff now so so hopefully you know you’ll see it soon I mean there’s all kinds of people are being super critical around a lot of the stuff I understand um but I do it it we’re going to have to do something for affordability because it’s it’s not going to get any any better I think we’re heading to a renter Nation I’ve been talking about it for a year and a half two years there’s been some people out there that have copied me on that which is fine but uh and I I think it’s true I think that we could be going into a really uh significant a time where the of you know the there’s no entry-level homes rents are expensive and you’re going to start to see rent control and rent caps and the government’s going to come out with a whole bunch of money uh for for different programs for both renters and for landlords to try to make things easier on people so that’s that’s actually what I see the next 10 to 20 years awesome well you guys have a great Memorial Day and we will see you next week see you guys

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