Financial Advisors React to BONKERS Financial Advice

Introduction – Unhinged Internet Content (0:22)

Brian: The content minions have been busy and putting together some more crazy content.

Bo: Brian, I am so excited about this because oftentimes the internet is unhinged. And I have a feeling today is going to be no different. Let’s dive right in.

Grant Cardone on Street Corner Hustling (0:33)

Video Clip: Real estate doesn’t make money. Making money is me going on the street corner right here and saying, “Stop the car. Can somebody give me 500 bucks right now? I need it right now.” If you need emergency money, just go to the street corner and say, “Stop the car. Can you give me 500? I’ll give it back to you in a year.” I could get somebody out there to give me 500 bucks. You can’t get that out of a real estate deal. But I would take the 500 and throw it in a real estate deal and go back to the street corner because I was out hustling for 500. In that case, I was 30 years old hustling car dealers for money. I would get the money from the car dealer, the one out of 10 that said yes to me. Take the money, throw it in a real estate deal, and go hustle another car dealer.

Brian: He’s basically saying, “Go out there and hustle. You got to go make the money and then you got to put it into passive type investments like real estate.” Grant kind of gives his whole game up because he’s one of those he’s smooth talking. He’s like the Ric Flair of personal finance, you know? It’s all about how he looks and smoothly puts things and then he gets you to he basically is sharing go buy his course, go buy his, you know, buy into this so he can go put it into his own passive strategy.

Bo: He said I was out there hustling and I went to a car dealer and the car dealer gave me money and I took the money and invested in real estate. I’m assuming he’s doing deals. Here’s what doesn’t make sense to me though, right? Like, hey, I’m going to you give me money, I’m going to borrow money, you’re going to give me money and I give it back to you in a year when I go put in a real estate deal. I don’t get that money back in a year. That’s not the way that real estate returns work. It’s not something that returns in a short term time frame. So, if you’re doing like short term borrowing, but you’re doing long term investing, which real estate is, it doesn’t even line up. Like, I don’t even understand how he does that. I don’t know that that’s the advice that I would take to start building my financial future.

Brian: I look at it more as a confession. Grant just let us know he’s a great salesman. Take that into consideration.

Patriot Pete’s Million Dollar Math (2:12)

Video Clip: A bad economy is a great opportunity is what I would say. If I had to start over again right now, it would be really simple for me. How many people are on this planet? 7 billion. And how many people do you need to give you $1 to be a millionaire? A million. That’s it. Patriot Pete.

Bo: I can’t argue with Patriot Pete. The math checks out.

Brian: Did you? Did you not hear that closing? When are we going to put an eagle scream in our closing? I mean, I think I want an eagle scream in every one of our intros.

Bo: Like, well, you know what, Patriot Pete, when you are ready to come on Making a Millionaire, you just let us know.

Brian: That’s not a real podcast. I’m saying that’s a skit.

Bo: No, I bet Patriot Pete’s a real thing. Here’s what I think.

Brian: Well done. If that’s a real thing.

Bo: You know what I agree with? Becoming a millionaire is surprisingly simple. It’s not going and asking 1 million people to give you $1 and come up with a million. But if you can take a little bit of your money today, a little bit of your earned income today, and you can start just putting a little bit of it aside and investing those dollars, you would be amazed. Would you believe for a 20 year old, if you want to have a million dollars by the time that you retire, less than a hundred bucks a month will get it done. It does not take a lot if you have time to let your money work. So, you can become a millionaire. And I would argue you don’t have to go, you know, beg people to give you money to do it.

Brian: I’ll do you one better. We’ll do it Patriot Pete style. You start out when you’re in your early 20s, 95% of the account when you’re a millionaire is growth from the investments. Not what you put in, but from the growth.

Bo: I knew beyond a shadow of a doubt you were going to do the eagle scream. I knew it was coming. It’s true. Didn’t doubt it for a second.

Brian: So, my strategy is a little more realistic in life, but it doesn’t have the razzle dazzle that Patriot Pete had, unfortunately.

HELOC Mortgage Payoff Strategy (3:59)

Video Clip: You take your entire paycheck, you deposit it into the home equity line of credit to pay down your mortgage. You then write all of the checks for your bills out of the home equity line of credit. You use money from your home equity line of credit to pay your mortgage, your electric bill, some life insurance, all the other bills. You will pay off your mortgage depending on how much money you make in somewhere between 3 and 12 years instead of 30 years. Whatever you do, don’t ever refinance a mortgage. Refinancing a mortgage to get a lower payment is a con job. They tell you, the bank tells you the lower interest rate, you get a home equity line of credit to lower your payments, but you buy into that. But what they know that they’re not telling you is when you refinance that mortgage, you restart the terms of the loan. So now 30 years, and the majority of the payments for at least the first seven years goes to interest. So, you’re going to end up paying more at a lower interest rate with a lower payment on a refi than you would have ended up paying the bank if you had just kept on making the same old mortgage payment.

Bo: Yeah. Unless you either keep making the same mortgage payment, just like what he said, because I agree with that. Or you just recalculate, pay it off on the same timeline. Even though the mortgage company will let you spread it out for another 30 years or spread it out for another 15 years, depending on the mortgage, you do not have to pay over that amount of time. You can continue paying on the same timeline and you’re going to pay it off much more quickly. You’re going to save yourself tons of interest. I love refinancing. I think it’s a wonderful tool to use.

Brian: If you refinance, only take the lower interest rate and reset the amortization. That’s a problem, but you don’t have to make that choice. And I also worry he was starting to dabble into the infinite banking type structure. So, there’s going to be another video or there was a part two to this where he’s going to buy you some life insurance in the background. You don’t have to fall into the trap he laid out. You can make better choices with your money.

Chris Hogan vs Dave Ramsey on Debt (5:48)

Video Clip: Should I pay off my house? No. Why do you hate Dave Ramsey? I don’t hate Dave Ramsey. I just hate everything he teaches. He’s teaching people to be poor because he is doing 40 years of time that they have to make money and he wants to donate it to getting out of debt and paying rent. You can’t eat no debt. You can’t travel on no debt. There’s a flaw in the practice. It’s everything is about eliminating debt. If you have credit cards that are like at 18, 19, 20%, you should probably get those eliminated. When people have most moderate debts at 4, 5, 6%, and you fire people up in a frenzy to, oh my gosh, hurry, you shouldn’t be able to sleep at night, get your debts paid off as if the world’s worst thing. It’s called positive arbitrage. I borrow money at 5% all day long and get it making 20%, 30%, 1,000%. And when I borrow at 5 and I’m earning 20, the difference is 15. I’m making 15 on debt. That is a productive debt. It is a good debt. That debt makes me money. And Dave just wants to act like all debt’s bad. I’m like, no, no, no. Consumer debt is bad. But debt is what this country is built on. Debt is what the wealthy are built on. Debt is about controlling money to make money. And that has fallen on deaf ears in his community.

Brian: Are we going to finally have a video where you and Chris are like united?

Bo: It makes me so mad. It makes me so mad because the content team knows they don’t need to give me something where me and Chris are aligned. But I don’t disagree with him entirely and completely because I do think a lot of people and even people that follow Dave, they get so passionate about being completely debt free that they end up making suboptimal financial decisions like paying off very low interest mortgages or focusing on satisfying debts that maybe don’t make sense to satisfy based on where they are in their financial order of operations. But here’s where I do disagree with Chris a little bit because I can never agree with him fully. You got Dave on one extreme, no debt, no debt, no debt, and you got Chris on this other extreme, all the debt, all the debt, all the debt. I think that financial mutants can actually live somewhere in the middle that there are debts that make sense that you should utilize, but that doesn’t mean that you ought to go in his terms borrow at 5% all day long so you can go out there and make 1,000%. And by the way, make 1,000% really? How about let’s just borrow at 5% and we could go make, I don’t know, 8 to 11%, which is much more reasonable long term rate of return.

Brian: Dave is a debt crusader. And then Chris out here wants to leverage, leverage, leverage. There is a walk here in the middle that’s actually going to let you be that financial mutant that Bo was just describing that lets you leverage debt as a tool, but also understand the power of putting your money to work and being a financial mutant with your army of dollar bills so that you can navigate this in the perfect kind of balance of these two forces. You don’t have to go on the extremes. The happy place is right there in the middle where you know what a tool is because money is only a tool and we’re just trying to help you maximize every opportunity you have. And if you want to know how to do it right and how to approach this, it’s why we came up with a financial order of operations. You can go to moneyguy.com/resources and download your free nine step process to figure out exactly what to do with your next dollar.

Lottery Scratcher Experiment (8:34)

Video Clip: Who can make the most money in an investment account? Can’t trust this stock market. It’s rigged. I’m going to show the people how to make their money. Scratchers. So I went to eight different liquor stores and I bought 662 scratchers. That is so many. Oh my god. Specifically, Pumpkin Patch Cash. Possibility of winning $30,000. And then spent almost 3 weeks in between meals when I would wake up early scratching. So, in this session, I think I only scratched about a third of the total amount. Look at the sun. You can watch the sun set on me and also the thought that this was a good idea. But, so in total, I made $454. That’s actually 600 and something in that video. I really think this is going to work. Oh, is that $1,000? Oh, it’s only 10. Don’t gamble, kids. There is no cash in the pumpkin patch.

Bo: That took me on an emotional roller coaster because I thought this was going to be legitimate and he arrived at the conclusion, hey, this doesn’t work. Now, I do have a confession. Can I confess something?

Brian: Yeah, confess them.

Bo: I do love the narrative around whenever I got to get a white elephant gift or maybe if I’m doing stocking stuffers, I’m a big scratcher stocking stuffer white elephant guy. And what I say is this is better than a present because what you can do is this is the dream. If you scratch this thing off, you can imagine all the things you’re going to do with all this money you’re going to win. I have yet to give a jackpot winner away.

Brian: When I worked at Delta loading luggage, we had a lot of downtime between the planes coming in and they always were playing lottery, you know, the scratch offs. Or maybe it’s because I was too close coming out of UGA with the Hope Scholarship. I was just like, you can’t pay for all this education if everybody’s winning the money. Casinos, anything that’s speculative like that, you’re never going to get ahead. It’d be interesting. I’d wonder how much that guy spent on all the scratchers. And if he went to moneyguy.com/resources and checked out our wealth multiplier tool, I bet his mind would have been blown away. And I bet it would have been more than $454.

Gold and Silver Investment Advice (10:59)

Video Clip: In 2005, 16 of these was the same value as the gold coin. Now it’s three of these. Silver’s become way underpriced relative to gold. Before 2005, gold and silver tracked pretty much at the same relative price. So does that mean we should all be buying silver or gold? I don’t think you should choose between them. I think if you don’t have thousands of dollars to invest, silver is a great way to start. In a hundred years, these will have beaten inflation. So, you’ll be able to buy more or at least the same with these. So, this is real money, which is why I talk about it.

Brian: That was a true statement. They will beat inflation. That’s really the only thing they’ll do.

Bo: That’s what they’re pegged against. That’s exactly right. It’s a fear index, right? Like all that really happens is the price of these precious metals increase when fear is high and they decrease when fear is low. You know, Warren Buffett wrote this in one of his recent letters. I don’t know what the price of one bar of gold is going to be 50 years from now. But here’s what I do know. 50 years from now, a bar of gold is still going to be a bar of gold. It’s not going to create anything. It’s not going to manufacture anything. It’s not going to change anything. It’s not going to innovate anything. It’s literally just going to be a hunk of shiny metal. And the only thing that’s going to make it more valuable is if the person who comes behind you is willing to pay more for it than you paid for it. So you better hope that you’re going to buy it when things aren’t scary and sell it when things are scary. He said American business is very different than that. And he walked through how stocks perform much differently than precious metals.

Brian: I like my investments to actually create and make money. When you do precious metals, you have to actually if you want to have them in the physical form, you have to pay someplace to keep it. And if you don’t want to personally hold it, you have to pay somebody else to keep it safe. So there’s a cost there. All the people who think that this is what’s going to protect you when the world comes to an end, how is that going to keep you safe? Are you going to break off a corner of it? I mean, shave off or what’s to keep somebody from just coming and taking it from you? I just don’t think it’s giving you the full spectrum coverage of catastrophic failure that you think it is. So that’s why I’m not a big fan of buying precious metals. You can dabble in it, but just don’t let that be your driving force of your portfolio.

Street Magic Money Trick (13:03)

Video Clip: Mate, excuse me. Can you swap these for a $10 bill, please? That would be really great. Fantastic. Did you count to make sure it’s 10? Count it. Make sure for me. That’s definitely 10. Oh, it’s nine. Nine. Yeah. Oh, okay. Hang on. There you go. That’ll be 10. Fantastic. In fact, wait, hang on. If I give you that, that’s 20. Could you give me a $20 bill? That would be even better. Yeah. This is so much easier. Cheers for that. Okay. Thank you, mate. Have a good one. Easiest $10 you’ll ever make.

Brian: You see this at the cash register all the time is that somebody will miscount and give you the wrong change. You just always need to be paying attention that you get the right change and other things. That was just he shifted his focus to something else and then took $10 from him.

Bo: Yeah. There’s no financial lesson here other than don’t steal money from people. That’s the takeaway. Don’t be a thief. Because that’s exactly I want to somehow tie this to like investing strategy and why Roth IRAs are amazing, which they are. But also, just don’t be a criminal.

Trust and Step Up in Basis Confusion (14:00)

Video Clip: If I bought a property for $200,000 and at the time that I die, it’s worth a million, that’s an $800,000 gain that my daughter would have to pay taxes on if I didn’t have a revocable living trust. The revocable living trust allows my daughter to get that step up in basis. That $800,000 gets stepped up to a million. Now she can turn around and sell a million dollar property and pay no capital gains taxes on it, right? That’s tax free wealth.

Bo: It’s going to get a step up in basis either way. Even if there’s not a trust structure there, whenever you die holding an asset, your people that inherit it, they get a step up in basis and the value of that asset. It makes the capital gain go away. It’s not required to have that held inside of a revocable trust for this to happen. You could just have something held in your individual name. If, you know, mom and dad pass away and they owned a home that they bought 30 years ago and now the home is way up in value, it gets a step up in basis without having to do a complicated trust structure to make that happen. Now, look, you definitely want to have trust and other things potentially as you get more sophisticated. Definitely, but sometimes when you get more sophisticated and more complex, trusts do come into play, especially depending on if you live in a state that’s good versus bad with probate and so forth. But I don’t know. I think I was missing some context there.

Brian: And I think you also need to be careful following someone’s tax advice or estate planning advice or financial advice that has something they want to sell you. So if you talk to someone who’s in the legal field and they’re going to recommend an estate plan, that’s probably going to be very complicated from a legal standpoint. Or if you talk to a tax person, it may be very complicated from a tax standpoint. You want to make sure that the strategy you’re implementing actually makes sense for you. So for most people, a trust structure might not be absolutely necessary unless there’s some reason to substantiate having that in place. And they need to be good for also who you leave behind. Don’t leave your loved ones some complex structure that they spend years trying to unwind.

Terrible Car Buying Negotiation (15:54)

Video Clip: How many miles are on it? 26,000. Only reason I haven’t serviced it yet is because I’m literally planning on buying a new car, bro. So, you know what I’m saying? I’m about to get a new car. Let us do the service. It’s all good. You said, “Hey, I owe 29,000.” Well, you can work with your brother here, man. We’ll try to call my brother and see. It’s a cool car. You don’t see it though, bro. It’s a super sick car. How much money down you got, bro? Honestly, like five grand. Like, dude, the thing is like if the numbers work with the G Wagon, like I’m not going to waste your time, bro. If this works, go next door, park it there, and I’ll see you back in the office. I’m not feeling too confident to be honest with you yet because it’s underwater. But let’s see. $13,480 is where we’re at now. I can’t just roll negative equity onto my next car. Like I’m just not doing that. I just can’t go out of pocket like that, bro. Where did you think you want to be? I want to be at 12, bro. Because so even if we gave you $30,500, you’re at $14,640. Yeah, we’re not that far. No, it’s not super far. Be in the 12s, bro. I don’t think we can get there. That’s pretty far. Even if I discounted my car like to 75, you’re $10,000 apart. What’s the max you can put down? Max would be there’s no way. If you can get me at $1,280, I’ll do it. If you can only put down 7 grand, you don’t need to be buying that car. Honestly, George, I like you. Bro, I want to make the deal happen with you, but I really can’t be in the 13s. Payment from $841. Okay, it’s going to be with a cosigner, 84 months. If I’m at 84 months, I need my payment to be lower than that, though, bro. No, it’s not going to work. There’s no deal. We can’t do it. It would be at $1,244. I’m doing everything I can for you. We’re going to go off these numbers right here and see if we can get it done. Just let me know. If we can get it done, we’ll get it done.

Bo: There was not one negotiation around really the sales price of the car. All that he cared about was the payment. Hey, give me the 12s, bro. Okay, let’s go to 120 months, bro. Do not buy a car that way. When it comes time to buy a car, we want you and you’re going to say why this doesn’t apply here, but we want you to do 20/3/8. We want you to put 20% down, which he was not doing. We only want you to finance it for 3 years or 36 months, which he was not doing. And your monthly payment cannot exceed 8% of your gross income, which if he was trying to be in the $1,200s, bro, I doubt that he was staying within 8% of his monthly gross income. And more than that, Brian, what should you do if you’re going to go buy a Mercedes GL?

Brian: Mercedes should be same as cash. So, he should have $75,000. The other thing it just broke my heart to think about, they’re talking about $1,200, $1,400 a month car payment. Do you know somebody his age that was investing say $700, $800 a month and then had a reasonable $400 or $500 a month car payment? We’re talking millions upon millions of dollars versus this car that’s going to depreciate like a rock. It’s gonna cost a fortune to service when he has the opportunity of being a billionaire of time that he could leverage and turn his dream into something pretty amazing. Instead, he’s just going to look cool for a small period of time. He ought to go to moneyguy.com/resources and check out our car buying checklist, our car buying calculator, our car buying affordability guide. So that way he will know how much car he can afford versus how much car he should not be buying.

Closing Thoughts (18:47)

Bo: Brian, I love that we get to do these reacts. I love that we get to see what people are putting out there on the internet. We want you to be careful. We want you to be informed. We want you to make wise financial decisions. Building towards financial independence is incredibly simple, but it’s not always easy. You have to make sure you’re careful of who you let in your ear so you don’t fall into one of the traps these people are laying for you. That last video, being rich is so much better than looking rich. So, just take that to heart. You don’t have to fake it until you make it. You can actually we have the financial order of operations so you can live your best financial life.

Brian: I’m your host Brian Preston. Mr. Bo Hansen, Money Guy Team out.