Lessons - How to Build Recession-Proof Money Strategies | Chris Miles - Cash Flow Expert

In this lessons episode, discover how to build lasting financial security regardless of market conditions, learn why tracking your money regularly matters, how maintaining cash reserves can protect your business, and why investing early and consistently helps avoid costly mistakes. Now, you can make the argument that if the recession never happened, the strategies you were deploying in your life and what you were teaching are sound, and some of them, like, still are. Like, investing in real estate is not a bad idea. You could still create passive income out of that. But, forget, pretend the recession, pretend we would hit another recession, which can always happen. What are some ideas that you teach now that are recession proof, that you wish you had done before the first recession, before the 2008-2009 financial crisis, so that you could have survived, regardless of what happens with the economy, the market, the banks, anything. Yeah, that's where you kind of heard the ender tones of it in that story, right? I remember in 2020 when we thought, okay, this is it. This is the actual black swan event that's going to create the recession that we were already expecting in 2019, because we were predicting 2020 would be the year of real estate would actually get hit and possibly depreciate. And then it didn't, because they sort of print money like Willy Wonka Chocobars, right? Yeah, but that's not good for the future, right? No, it makes the bubble bigger. It's blowing up that bubble. You get this nice little bubble gun bubble and you're like, oh, that's big. Let's just keep going. It's all of your hair and stuff, right? That's what I'm expecting, too. And so in 2020, it's the same advice I even get people today, which is these three things, is get lean, get liquid, and get out. So, get lean means, make sure you're tracking your money, right? If you're a business owner, even in real estate, or wherever it might be, track your money in your business, using QuickBooks or whatever you might use. Zero is another one like XERO is another one that's like QuickBooks you can use, too. In the personal life, make sure you're tracking your personal home as well. Try things you know, you can use like rocket money or a monarch money or good tools you can use to track your money. But start really watching what's coming in, what's going out? Don't just watch your spending. I mean, that's important, too. But watch what's coming in and going out, know the full flow of your money. How much positive or negative cash flow are you? And understand that on a very, on a very solid level. Don't just do it once a month or at tax time once a year, you know, do it like I would say, if not weekly, at least every other week, you know, really start to understand your money and where it's going. Don't even worry about creating budgets. If you've never done this before, track your money for like at least six to 12 months, then you'll have enough evidence and enough data to figure out how to actually create budgets and whatnot, which by the way, I hate the word budget. I like spending planned because let's be honest. That's really what it is. So that's a big one. So get lean and get rid of the expenses that just don't serve you, right? Things that, you know, it could be a subscription. That's not serving you very well. Maybe it's like, you know, maybe it's like you're just going out to eat one too many times or probably more like 10 too many times if anything, right? Or whatever it might be, like just try to find ways to to be a wise steward of your money. Then get liquid. See, that's the problem. I, so first, I was tracking my money, you know, in 2007, I was because money was so abundant, it was like air, but also like air, when it disappears, you count every breath, don't you? And the same thing with money, I didn't start counting my money until it was already too late. I was already, I was reactive, not pro pro active. And so track your money for one. Two is get liquid. Get liquid means make sure you have liquid reserves in business. Man, you can, you better make sure you have at least a few months of expenses for your business. Now, if you're a real estate investor like, like, I was talking on Steve Triang show recently, we're talking about this. If you've got like marketing strategies that could take nine months to finally deliver results, then you might want to have nine months of reserves or more just in case, because if it's going to take a while for that to kick in to start producing some income, you don't be left high and dry because the number one failure in business is not because people just suck a business. It's usually because they lack the capital. They've usually haven't planned appropriately to have enough reserves. So have good cash reserve in your business, have reserves at home. I found as a business owner, I recommend at least 12 months is pretty of your monthly expenses. So if you already know your expenses are six, 10,000 month, you probably want to have about $120,000 you don't touch. In my own life, I have 400 grand that I keep between, you know, typical bank savings, high yield savings, and then life insurance that I keep, you know, most lines share there just so I can diversify my money a little bit, but make sure you have those reserves. And don't tie your money up in those IRAs and forewing ks and whatnot. I mean, I know that's counter to what everybody else wants to teach you. And even in the real estate space, how some people say, oh, no, it's good to get the solo forewing ks or get the, you know, the self-directed IRAs. And if you already have them, that's one thing. But if you're trying to put new money into these plans and you're thinking, oh, yeah, I don't want financial freedom before I'm 60. No, screw that. Like I want to make sure I'm at least 60 years old before I have any kind of freedom. Well, then good. Keep putting money in those plans. We want freedom before you're 60 because you don't have to deal with 59 and a half penalties and things like that. Well, then get your money liquid. You know, have it outside of that. And then that's where I will say that then get it out. And especially if you're an active real estate investor, one of the biggest mistakes I've seen, and I'm in several mastermind groups where, I mean, there's like high level investors, you would never think we'd go out of business and are today one because they didn't have cash reserves, but two, because they were all in on their business. And so Mike, the Caloitz, that's another great book. If you ever read profit first, great book to read and then implementing that system into your business and make sure you actually have profit. If you're always reinvesting all of your money back in your business, the thing is you're not profitable, right? You're spending money, you know, and I'm all about growing a business and they can be bigger and bigger, but not if it means that you stuff to keep working as a slave in that business forever. I like to be work optional, right? I work because I want to because I have to, because I've, I've, I've been able to retire twice and I just can't do it because I get bored, right? I just, I have to have purpose. I can't just sit around my beach or go golfing because I don't golf. That's big reason. You know, sorry. I know you're a Miami. I know they've got great golfing out there too in that direction. But oh, you're not defending me. Listen, I grew up in Toronto. So golf was the necessary side effect of playing hockey in the winter. That's all we could do. But outside of that, I'm not a big golfer. Yeah, it's not my thing. It's my doors in that, you know? Yeah, there's that. Listen, after moving down, I'm still acclimating to everybody loving football and basketball over hockey. So that's fine. I'm, I'm getting used to it eventually. But yeah, no, I also don't think that people completely should completely retire, but that's besides the point, the point is, do you have the option to retire? Do you have the option to work if you want to? You're, you're family safer, especially if you have other students of income outside of that business. So when you have that extra profit, take that and invest in things that do generate passive income for you. And that's a kind of a debated word about passive because is anything truly passive? Not necessarily because you still have to manage it. You still have to be a steward of your money. But it's nice for me. Like I like to be able to, well, here's an example, like several guys in this high level wholesaling flipper group that I was in the match mine with, you know, I don't want to say their names out, you know, out here, but they're great, a great group. But in that group, there's a lot of guys that were like all in on wholesaling, they're doing great. And I kept saying for years, and I wasn't the only one, even the leadership was saying the same thing is take the chips off the table. And, you know, even if you got great deals, maybe keep them for yourself instead of flipping that property, maybe you keep it, and you rent it out, you know, or whatever it might be, like get additional streams of income. And there was one guy in particular, he was out in in Pennsylvania, and he was even like, dude, how do you have so much passive income? He's like, I would love to have like 10,000, 20,000 a month. I was like, well, dude, just even if you're an active investor, cherry pick. Now, cherry pick some of your best deals, keep them. Don't don't flip them all. Like yeah, it looks good on the on the ego numbers, you know, for revenue and such, but keep maybe keep those properties and cash flow and dude, when 2020, especially going to 2022 and 2023 hit, which was even worse than 2020 for us, right? In 2022, 2023 hit, he was one of those guys left standing because he finally decided to take some of the chips off table, cherry pick and keep some of his properties. His rentals literally saved his wholesaling business. If they weren't for that, he would be out of business today. But because he didn't have to keep taking our family, because he knew he can maneuver and pivot and do certain things, he was okay. And he even had some of the business owning some of those rentals too, so that they ain't cash was still coming in even if the wholesaling had dried up. And so that's where it's very I think that's that's the big thing I learned. That's why the second time around and 20s end of 2016 when I was financially dependent again, you know, and I don't do active stuff. I'm not the type of person to go and wholesale or flip is really anymore. Like, I like other people do it. Now I just use my capital to go out and work for me and let those guys do all the work, right? Because they're they're younger and full of life energy. I think that it's so this is something that I see with entrepreneurs as well. They build a business at the point where then they make a ton of money with an exit or an acquisition. And then they just start investing. Then I'm a big fan of invest along the way and take money off the table a little bit earlier. So you again, it's the same concept, right? You come from a real estate world where it's all active active I come from a background in tech where it's all active building and raising the next round and and whenever you have the opportunity start to learn how to invest because a good entrepreneur or a good active somebody is actively participating in real estate wholesale flipping. It doesn't mean you're a good investor. So you have to learn you have to practice. It's not something they teach you in school. And I think that if you wait until you have this huge windfall, this huge amount of money and that's when you start that's when you can make some super costly mistakes as opposed to if you're just playing with a couple 10, 10,000, a couple tens of thousands as opposed to doing really large investments before you've ever really had experience doing it. And what I see how often is people who become good at making money and they make a lot of it, they think that they're going to be good at investing. And then the mistakes they make are in the hundreds of thousands, if not millions of dollars, which is horrible. I mean, they can probably afford it, but that's not the point. Those mistakes could be made completely. Those mistakes never had to happen. If you just start acclimating yourself and and and learning how to invest at a very small level and something that can generate income all you sleep. Yeah. Make early money and money and growing wealth are two very different skill sets. Very much so. And for some reason they get conflated as just one one idea and which is incorrect. When you put your money and you park your money into something, there's another point or an idea that we have to discuss, which is say it is something passive. Is there ever a point when you should pull it out? So for example, you sort of saw some signals that the market wasn't going in the right direction. You mentioned that guy, the general at a California that just by chance took his money out of the market at two very specific points and he had great returns. So it can be invested for the long haul for a period of time. Are there signals that you should maybe liquidate and take some of those sort of longer term investments and just maybe hold that cash that you've seen? There are. The thing I often teach our clients is I tell them not to ignore the news, at least from the standpoint of taking any advice, but listen to what people are saying, not just the news, but even like what might be like the person that barely graduated high school that you went to school with, right? Or even the person that's like on the street or your Uber driver for that matter. I mean, if they start talking about a certain investment as being like the best investment right now, that is probably investment to start selling. For example, I remember, you know, there's been ups and downs in Bitcoin, right? Now, I'm not a big fan of like Bitcoin as a wealth building strategy. I think it's kind of a fun thing to play with. You know, great gamble with money, but don't be, but don't be mad if you lose it all, right? That's kind of why I say like don't invest more than you're willing to lose when it comes to things like Bitcoin. Same thing with stock investing and whatnot. Well, I remember this is in 2018. It was December. It was starting to hit a high of like 20,000 everybody's talking about Bitcoin. And I said, you know what? I predict it's going to crash and it did. It crashed because why every time I Bitcoin. And then it started to try to rear back up again, you know, it towards like 65,000 remember that like in in 2022, right? The spring of 2022. And I actually bought it when I crashed down whenever he was scared of Bitcoin, that's when I bought Bitcoin. It's kind of like the Warren Buffet thing like, you know, whenever things, whenever he's greedy, be fearful, whenever he's fearful, be greedy, right? So I always do the opposite. Wherever the crowd is running away from or running tours, I run I run the opposite direction. Well, same thing happened again. So I bought like a 6,000 Bitcoin. Now it's going up towards 65. And then everybody starts to say how to buy Bitcoin. I even remember on Facebook had friends that barely graduated high school saying, how do I buy a Bitcoin? And where do you, I mean, where do you buy it? Do you get it from a store? Like I was like, oh my gosh, this is the time when dumb money's in right now. This is it. This time to get out. So I sold right around 50,000. And of course, it came crash down to like 16,000, right? And and that's and that's the thing. Like now real estate isn't much different. Even a real estate tends to be a little bit more stable. And that's why I liked store most of my wealth in real estate backed investments. But same thing can happen, right? If everybody's saying everybody buy a real estate, which I haven't seen that day really happen, I've always heard people be scared of real estate ever since 2008, right? Like it really everybody's like, oh, I don't know, real estate's going to come crashing any minute. But you don't really hear that about the stock market. So I'm just keeps going up up in a way more than it ever has in history for these last 15 years now going on 16 years. And yet people are still like, oh yeah, that's where you put your money. That's where you go. Yeah, put in stocks. It's great. Put in the S&P 500 index. You know, doing pay the extra fees, right? They all say the same thing. That's when you know something is overvalued. So now whenever it's fearful, like right now people would be fearful of buying apartment buildings. Like it's finally got to the point where people now been burned so badly in the last two years. This might be a good time to start looking at apartments again because the value should come down self storage not so much. Self storage is still a little bit overpriced. Nobody's really said self storage is a bad deal, right? So when people tell you it's a bad investment, it's usually when it's good. When they tell you it's a good investment, that's usually when it's bad, at least for the timing. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.