IDL40 Season 1: The Philosophy of Lifestyle Investment with Justin Donald
Which aspect of a decision matters the most? Why should you view your surroundings like case studies of the life you want to live? Why is it important to let your values guide your financial journey?
In this podcast episode, Tyler Dickerhoof speaks with Justin Donald about his investment philosophy for the modern lifestyle investor.
Entrepreneur Magazine calls Justin Donald the “Warren Buffett of Lifestyle Investing.” He’s a master of low-risk cash flow investing, specializing in simplifying complex financial strategies, structuring deals, and disciplined investment systems — that consistently produce profitable results.
In the span of 21 months, and before his 37th birthday, Justin’s investments drove enough passive income for both he and his wife Jennifer to leave their jobs. Following his simple investment system and 10 Commandments of Lifestyle Investing, Justin negotiated deals with over 100 companies, multiplied his net worth to over eight figures, and maintained a family-centric lifestyle (all in less than 2 years).
He now consults and advises entrepreneurs, executives, and successful media personalities on lifestyle investing.
Connect with Justin on Facebook, Twitter, Instagram, LinkedIn or Youtube.
Visit Justin’s website, listen to The Lifestyle Investor Podcast and enroll in Justin’s Course.
IN THIS EPISODE WE DISCUSS:
Stick with a decision
Observe everything like a case study
Garner words of wisdom
Stick with a decision
In a business context, there is seldom a situation where a decision is definitively right or wrong.
What matters more is considering what the outcomes of the decision will be, and how many positive aspects and consequences you may have to work with as a result of that decision.
“It’s not like it’s right or it’s wrong. You make a decision and then you learn from that decision, and then you move forward with the new decision that you’re going to make that you’re more equipped for than decisions A and B. ”
Observe everything like a case study
Think about the life that you want to live and find people who are already living that lifestyle. Who are you spending your time around and who are you spending your time with?
“Do I want to replicate that? Is that how I want my life to be? Every time it was a yes, I was like “alright, let’s get to know this person better. Let’s ask good questions.” ”
Observe your team like a case study: watch what they do, see if it resonates with you, replicate it if it does or move towards a different group of people if it does not.
Garner words of wisdom
Beyond the success and financial freedom of being your own boss and earning your money, remember that the world is relationship-based. Remember to find and maintain the value of your relationships.
Spend time with people who have lived full lives and ask them what they might change or do differently, or what they learned from their time being alive.
“For so many people they have to make all this money to realize that the money doesn’t matter. Whatever dollar amount you want to make, when you get there it’s never enough, you always want more, you always move the goalposts so it’s not about the dollars. ”
Do not get addicted to the dollars, the net worth, the ego, and the control. Remember your values and be guided by your principles in your financial journey.
Resources, books, and links mentioned in this episode:
Connect with Justin on Facebook, Twitter, Instagram, LinkedIn or Youtube.
Visit Justin’s website, or listen to The Lifestyle Investor podcast.
Enroll in Justin’s course
BOOK | Justin Donald - The Lifestyle Investor: The 10 Commandments of Cash Flow Investing for Passive Income and Financial Freedom
BOOK | Robert Kiyosaki and Sharon Lechter – Rich Dad Poor Dad: What the Rich Teach Their Kids About Money
BOOK | T. Harv Eker – Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth
BOOK | Thomas Gryta & Ted Mann – Lights Out: Pride, Delusion, and the Fall of General Electric
BOOK | Carol Dweck – Mindset: The New Psychology of Success
The Impact Driven Leader YouTube Channel
Join the Impact Driven Leader Community
Connect with Tyler on Instagram and LinkedIn
Email Tyler: tyler@tylerdickerhoof.com
About the Impact Driven Leader Podcast
The Impact Driven Leader Podcast, hosted by Tyler Dickerhoof, is for Xillennial leaders who have felt alone and ill-equipped to lead in today's world. Through inspiring interviews with authors from around the world, Tyler uncovers how unique leadership strengths can empower others to achieve so much more, with real impact.
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How did I get on the path that I got on is [that] I just paid attention to who was doing what I wanted to do. Who was living a lifestyle that was really appealing to me?
Justin Donald
Podcast Transcription
[TYLER DICKERHOOF]
Welcome back to the Impact Driven Leader podcast. This is your host, Tyler Dickerhoof. So thankful you're joining with me today. Whether you're listening today on the day it releases or somebody shared it with you, you found it later, or as some people, do you bulk them up, that's great. You wait till you're driving. You wait till you're doing something. Maybe mowing the lawn. I get it. It's all good.
Today I am so pleased to share a new friend, Justin, Donald, the lifestyle investor. You're going to be able to hear from him. You're going to hear about his experiences investing. Yes, this is a leadership podcast. Remember this is a leadership podcast, but part of leading is also understanding business. We weave a lot of leadership conversation into it. We weave a lot of really how you view your business, your world, what you're doing, how can affect your leadership. So we're going to talk about that. We're going to talk about his 10 commandments to lifestyle investing and really kind of challenge the status quo of investing.
This is what I do know though, is when you could focus on being the best you, you can also focus on how am I making sure I'm taking care of myself. That's where you're better able to serve others. It is the oxygen mass theory. I hope you get great value out of this. Please, I'm going to see at the end. I'm going to share a couple things with you as we wrap up.
The reason it made me anxious, because it's like, what I hear is like totally good, I agree, I don't want to have to learn how to do it because I love learning what I'm learning now. I'd much rather say yes, please take that weight off my shoulders because I know what I'm doing. I wouldn't say it isn't that I know it's not right. You know, for example, our portfolio, obviously I have some from previous career, have some ESOP, have some, whatever, assorted, 401ks, some Roth, some cash balance life insurance stuff, have some real estate investments, have other things it's like I understand.
[TYLER]
And part of that has been my personal desire to have some diversity, but yet it makes me anxious because it's like, okay, Justin, I get what you're saying. I don't want to have to do it. And a part of me of looking at it say, okay I have a million dollars in, whether it's all those, we'll say corporate held, not privately held, corporately held stuff, it's like, how do I unroll that? What do I do with it? So all of that stuff just made me anxious. In other words, say, I get it's wrong. I have no problem accepting it's wrong. I appreciate someone like yourself who trust and know because the mutual people we trust, like just take this away from me. I don't want to have to, I want to go do the stuff that I love to do, which is to sit down and do this stuff and help other people grow and accomplish more. So it just, has anyone ever told you that?
[JUSTIN DONALD]
Oh, I get it all the time. And I love, one of my favorite things by the way is like when we have a conversation, we're talking before the podcast starts and it's totally like an off air conversation and it's like, oh, let's just hit record now. I love that and I loved how just how vulnerable you are and willing to just say, Hey, here's where I'm at. That's so normal. I mean, I experience this all the time, Tyler with people across the board. Some people are hungry for an education. They want to learn it. They want to know it. They want to be at least somewhat of an expert or at least somewhat knowledgeable, but we have other people that show up in our mastermind that, I mean, they don't really care to learn it. They just want access to the deal flow. They just want access to the pre-negotiated terms.
So it's funny to see who shows up because we've got, everything we do, we record it. So you have some people that just love to be on live and they want to ask questions and they want to interact and they want to engage. And then you got other people that are like, well, hey, if I wait and I listen to the recording later, I can listen at it at 2.0, so it'll take me half the amount of time and I can do it on my time at whatever time I want to do it. And all I really want to know is like, is this a good investment? So it's just different strokes for different folks. But I mean, at this point I feel like I've seen it all.
We've got 76 mastermind members and I just feel like there's a little something for everyone. We've got like every major profession covered. We've got every major demographic covered. I mean, it's pretty incredible. And we now have double digits of people that are outside of the US and all across the world. I mean, Israel we've got people Isle is of Man and Barbados and Australia and Spain and Canada and Thailand. So it's interesting, even for some of these people where their whole system is different than our system. They don't even know what a 401k is in many cases because they either don't have one or it's called a different name or there's just totally different rules. And then you've got all the people inside the borders of the US, or, and I would even say north America, but Canada's got a whole bunch of different types of investments and qualified plans. They don't call them qualified plans.
So it's neat learning those things and interacting with people, seeing maybe where their government is doing better than ours, or maybe where our government's doing better than theirs. But at the end of the day, the concepts are the same. It doesn't matter where someone's from. It's about buying assets that produce income, that are low risk, that create cash flow and that have the ability to appreciate. And the odds are really good if you buying a high quality asset when monetary supply expands, meaning more money is printed. You print more money, the value of assets rises in tandem with that. So as monetary supply expands asset value expands. So it's just a hedge, devaluing dollar that every single day is becoming weaker. If it's just sitting in a bank account, it's getting weaker. Inflation is way higher than the 2% to 3% that they say, way higher. We just printed like half the money is circulation in the last year.
[TYLER]
They told us it's not. It can't be. They told us it's not. But when you go and you buy something and it costs 15 to 20 to 30% more than it did a year or two or five years ago, you're just looking and the numbers wrong.
[JUSTIN]
That's right.
[TYLER]
Well, to start off and again, thank you for joining me, it's great to connect. Fortunate I had friends connect us and thankful for this conversation to get to know you better. And really my desire here is to help one eliminate some of that, I guess that cloud over someone's head. It's here I'm trying to do my job. I'm trying to lead people. I'm trying to serve people the best I can, but at the same point, I'm trying to figure out how do I either create a company to where I can people move forward so when people within my organization are saying, "Hey, I want to grow. I want to be more financially stable. How do I do that?" But then as well making sure that I'm creating financial stability for me.
If I'm a business owner, and if I'm doing things that are creating financial stability for me, I'm going to become a better leader. I'm not going to have that angst, that constant angst, "Oh, can we keep our business afloat?" If I'm doing things within my business well, in order that we are able to grow as a business because we have different income streams or value assets bringing in income, we're going to be a better business. So those are the things that I'd love to hear from your experiences, what you've seen and, or kind of your own past, how you got to where you are and some of those struggles you had. So that's kind of my hope if that's cool and just have a conversation about it.
[JUSTIN]
Yes, you bet. I'm an open book and I've had more struggles than probably most people will want to endure, but I'm happy to do discuss them all. Sometimes it's real easy when you look at where someone is and say, gosh if only I had that or it seems real easy, but everyone struggles with things in their own way. And everyone has strengths and things play to those strengths and then everyone has weaknesses or areas of ignorance and sometimes events play to those weaknesses. So a lot of my greatest lessons that I learned were lessons that were just a sucker punch to the gut and thank goodness I learned it the first time.
[TYLER]
As I've learned from those experiences, education costs, you're going to pay for it one way or the other. It comes in one form or another, but it costs. It always costs. Now the hope is that you limit the cost and you don't have to pay for it more than once.
[JUSTIN]
That's right. That's right.
[TYLER]
So kind of take us back to your experience or how you got to this point where to be a lifestyle investor and say, "Hey, there's a different way to do this. I could do this differently, that is only, not only more secure for me, but everyone else I serve." So kind of start us off there.
[JUSTIN]
Sure. Well, I think Tyler, what happened for me is I started doing these case studies in my mind that kind of played out in a little bit more detail. I remember a mentor telling me, and then I read this enough times where, to me, it's like, if I read something or someone tells me something, three different people or three different times that are totally unconnected, it's like, okay, maybe I need to pay attention here. So the message was pay attention to the way that people are creating their wealth and is that how you want to do it? Is that what you want? So be a student of their business or of the way they earn money or the way they save. So it was very interesting to me that I just saw so many people that were either working really hard for someone else or that they built their own business with a goal of autonomy and freedom and a lot of income, but they built this prison or this trap where maybe they're making more money than what they were making as an employee, but they're working more hours and they're tied to their business more. They're really a slave to their business.
And I saw this and I saw high income earners, but without time. So it's like, okay, I realized, okay, I don't know that I want to work for someone else too long. I think it's good to do that. I don't think there's anything wrong with it, but based on what I wanted, I wanted to have my own business or have independence from relying on someone else. So then I moved to kind of being an entrepreneur and I too became a slave to my business and I worked a lot of hours, especially at the beginning, and then, especially as I saw that you could earn more income. And at first, instead of building like smarter systems, I just worked harder and I did more and then I learned like, okay, that's probably not the best way to scale.
I need to, I actually need to put people in place that I can train to be great, and I need to put processes in place that can be replicated. So I kind of learned that there, but as I paid attention to older people, I saw a lot of people just basically lose the vast majority of their net worth, which was all in the stock market in the 2008 crisis, financial crisis. So like with those people that were retiring right then it's like, they're never going to make that money back. They lost half of what they had and just because you get back to where the stock market was, then that doesn't mean they made their money back. They're still negative. A lot of people don't understand that. If you drop 50% and then you increase 50%, you're not back to even. You're negative.
So I just saw it and I saw all these people with everything in stock market or the vast majority in the stock market. Then I saw other people that were just so tied to these qualified plans that gave them no optionality. They had to wait until they retired to tap into those funds or else there's penalty and taxation. And they just had so few options and the options that they had, they didn't even existed and they didn't know what to do, even if they did know it existed. I saw other people with real estate do pretty well. I mean, I saw some people not do well, that had to sell at that time, but I saw other people that held onto it. And I was like, "Ooh, well, that's smart. Don't sell if you don't have to and buy assets. That's good." I'm glad I saw that from someone else. And by the way, I made the mistake, like the first home I bought, I bought in ---
[TYLER]
Do we want to go there?
[JUSTIN]
Sure.
[TYLER]
I'd love to hear. The first home you bought, when was it?
[JUSTIN]
So this was back in 2005 and I was ---
[TYLER]
Same here.
[JUSTIN]
I was in Chicago at that time. So I bought condo, a penthouse condo, but it's not really a penthouse. I just thought it was really cool to say that and be able to buy one. It was a three story building. I mean, it was top unit.
[TYLER]
That means the top floor, dude.
[JUSTIN]
That's right.
[TYLER]
That is funny. You live in a three story apartment complex, you just say, oh no, I have the penthouse. You have the most stairs.
[JUSTIN]
Isn't that funny? Love it. We used to joke a lot about that. It was just the worst timing to buy. I bought on a stated interest or a stated income loan, which is crazy that those existed, but they did. And I'm glad that I participated in that. Then I had an opportunity to get a promotion and I needed to move territory. So I literally moved into this home and three months later, I had this new opportunity. It may have been two and a half months later. So I'm like, "Okay, well, I'll rent it out." I had a roommate already. "I'll just rent it to someone else." But the problem is I bought it at such a high price. It was $350,000, and then there were assessments and then there was parking and then repairs and all this.
So I wasn't positive cash flow. I was negative. I was negative cash flow. And I did this for years because I was going to sell upside down and I didn't want to sell upside down. At one point I took a home equity line against it to use those funds to start a business that didn't take off as quickly as I wanted it to. It was like just bad timing. So not only was I upside down, I'm even more upside down with this home equity line. So eventually I just had to cut ties and ended up losing over a hundred thousand dollars on that deal, plus had to pay off that line. So it was a great lesson in timing, in holding assets, in renting, like I'm never going to buy condos to rent. Well, I shouldn't say never. The odds of me doing it are not good because it's just not as lucrative as a single family home, in my opinion, or at least in most areas of the US. And there are extra fee ---
[TYLER]
Yes, very few, I think, it's probably worked somewhere, but it's like, there's also 75 people that are competing over that. It's like, I go somewhere else. Funny enough, and again I think we're similar age. We bought our first house in '05. And this is one of that I think is important as leaders to talk about, is the value of timing. You said timing. I think we can get hung up on the timing and think, oh, I missed the boat. What I realized, and I'd love to hear from you on this sense is that timing you bought it the high of the market, we bought it the high of the market because we're like, oh, we're getting married. We're going to buy a house, whatever neat place to live and looked at all of her friends that had bought two years before and they bought the same house for a hundred, $150,000 less.
And like, well, it's going to keep going up and yet it didn't because of everything happened then and realizing, hey, there are cycles that happen and understand generationally there are those cycles. So it sounds like you became aware of that. I've become aware of that too and I think that's important as leader to understand, hey, start to look for those cycles. To understand that in business, in leadership, in real estate investment, investment period, to know there's going to be ebbs and flows, right?
[JUSTIN]
That's right. Oh, without a doubt. And those are like some of my best lessons to this day, because I have avoided buying in certain markets, certain types of asset classes, certain times of the year, certain times of a business or market cycles. I mean, that was great because now I second guess everything to the point that I probably don't get in enough stuff that I should, but I'm probably safer. I'd rather not lose money than make a good return.
[TYLER]
What's funny about the house we bought, we bought it just for context here, bought it $295. It's value, according to Zillow, bottomed out, was somewhere in the one forties. We did have it rented out so we're able to not lose much. I think at most we were upside down, cash wise; a hundred bucks a month. We ended up selling it now six years ago and on paper we lost 60 grand. And I saw just the other day I happened to look and it sold now in 2021, what we bought it for in 2005. It's amazing. You know, and again, where that home was in central California, that evolution of market, but also understanding, we since moved on, you just got to let those things go.
Again, like you said, take loss of a hundred thousand ticket experience. I look at that from a business point of view, as well as is sometimes taking the loss and just moving on, can free up mental capital about how do I make this work? How do I make this work? When can I get this even, which is an important lesson I think I've learned. And it sounds like you're learning that or have learned that too.
[JUSTIN]
Yes. And that's the thing. It's like the mental strain or drain that it can take this toll, it can take where you're always thinking about it. I was at least. That just didn't feel good. It wasn't healthy. And I just look at it as like my MBA and real estate. I went to the University of Illinois, $15,000 a year, that was $60,000. If I'd gone there to get an MBA, it would've cost me more than that, or relatively close to that. So it's like at the time it hurt, it didn't feel good. I was annoyed and I was a little skitish of even investing in future deals, but then grew up a little bit and just learned the lesson. And it has been a great lesson for me. I mean, I learned great things in college, but that one lesson probably has made me more money than anything I ever learned in college.
There are some general concepts and some good contexts that I had, but just the reality of doing it, home of ownership, whether you make money, you lose money, there are good lessons. And I got beyond the point of being like, is this the right decision? Is this the wrong decision? For me it's like, you either make decision A or decision B. And then when you do, there are consequences and there are positive outcomes and you learn those. And because you picked whichever one you pick now door C and D open. So it's not like it's right, or it's wrong. It's you make a decision and then you learn from that decision and then you move forward with the new decisions that you're going to make that you're more equipped for than you were at decision A and B.
[TYLER]
Well, what I think is great there is just taking time to evaluate say, "Hey, all right, what happened? What went well? What didn't go well? What am I not going to do again? Or maybe what did I, I missed time." One of the things that you said is like missed time, misplaced the investment to where I couldn't cash flow it. I was upside down as opposed to, it could have been a great buy at some point, if the rental market is high enough and I own it. That's a great buy in the right situation. However, the timing wasn't right.
[JUSTIN]
Yes. Timing wasn't right. I was renting it to some friends, I wanted to do them a favor even beyond what I probably should have done is just figured out what market comps were. I still would've been negative, but I mean, I was extremely negative. And then I eventually had ---
[TYLER]
Because you bought a penthouse.
[JUSTIN]
Yes, right, exactly. Exactly. Just a cool, I mean, it was in Lincoln Park, it was a cool part of town, cool part of city, cool part of Chicago but it was awesome. But it's like, even in this process, I met people in the real estate world. I met people that were investing. And this circles back to what we were talking about, like, how did I get on the path that I got on? It's I just paid attention to who was doing what I wanted to do, living a lifestyle that was really appealing to me, who wasn't scrimping every dollar that they make that is totally scarcity mindset like I can't buy this latte. I can't go out to eat. I can't whatever it is versus I found other people that were like, instead of not doing it, why don't you just figure out how much it costs and then buy something that produces that amount?
And it's like, wow, that makes a lot of sense. I don't know why I didn't think of it, but I didn't. I needed people around me to influence me and I needed books to influence me. So I had just eventually figured out, like, here's all the things I don't want to do, here are all the people working way too long, here are all the people that don't have access to any capital. Here are the people that are working so hard, whether they're making a lot of money or not and some of them weren't. I don't want to work that hard for money.
So it's just so many great lessons when I started looking at everything as a case study and saying, do I want to replicate that? Is that how I want my life to be? And every time it was a, yes. It was, all right, let's get to know this person better. Let's ask good questions. I want to be a student. And I do believe I'm a lifelong learner, I'm an eternal student. I always want to learn, but I love finding people that have done it in a very successful way, in a very unique way, and then I'm a copycat. I just copy it exactly what they do. I don't reinvent anything. I literally copy it until I feel like I'm extremely proficient and only then do I tweak it and innovate it.
[TYLER]
Well, I mean, there's so many great lessons in there and it's the idea of, it's been said, everything is already, there's nothing new in the world. So it's kind of like now, could you iterate that if something comes along? Sure. But it's like, I don't need to reinvent this just because I need to put, you know in your case, well, Justin needs to put his spin on it because he can't do what Bob does. It's like, no, do what Bob does. Bob's successful. Just keep doing it. And I think that's a big lesson to learn at some point in life. One of the things that you kind of, as you were going through that made me think of this idea. If we scrimp in life, if we think the way to get ahead in life is just extremely restrictive in our lifestyle, I believe this is we create that scarcity mindset in everything we do.
If I am living so tight from a budgetary point of view so I can save up so someday my wife and I live debt free, that we can go travel, there's two things that I believe happen. One, I may never get there. I could get off this call and I could be done. Nothing is guaranteed. I believe that. Number two is even if that is the case, that means, however I view life it can't help, but spill over into everything else. And if I'm building a business, I'm leading people and I want them to think abundantly and yet everything in my life is thinking from a scarcity point of view is those two can't go hand in hand.
I know it's your, your first commandment of your 10 commandments, which is this lifestyle first, which I love, and I think it fits into it because you can't be one in one spot and be different than the other. That's where I get challenged. I know that's trying to set this up is a little longwinded, but I get challenged from some people that are like, "Hey, just restrict everything you do. My viewpoint, that is not progressive. That is just fearful as opposed to learn these lessons and then don't make mistakes.
[JUSTIN]
Yes, and don't wait until you're retire to have a great life. Have it now, because you can. The other thing, just to take it one step further.
[TYLER]
Yes, please.
[JUSTIN]
Because I have a lot of clients and people that I've worked with over the years and what happens, the people that are really scarcity minded, pinching pennies, they have built up this habit over time that when they do retire, they don't give themselves permission to even spend the money. And they go living all their retirement, because they're worried, it'll run out and because they are just ingrained in this habit of always doing that. So I know people that are retired, don't spend hardly any money, don't hardly ever travel, literally like figuring out which gas station has cheapest gas, using coupons.
And by the way, there's a time and a place in life where that may make sense. I don't want to be critical of anyone's situation but at the end of the day, your behavior is, you're creating routines and habits through the way that you behave, the actions you take, the way that you think, that are going to carry on many years in the future. So I think when you establish strong habits, mentally first, physically, staying in good shape, emotionally, I really think, spiritually as well, I really, really think that that's the key. Because you can have a killer life today and I believe it should be that way.
You should love the life. You should find a way to be able to do that and live the life that you desire with the people that you want to spend time with and be intentional about it. And you don't have to wait until you retire to do that. You can do it while you retire, but you can do it leading up to when you retire. You can do that in the process of the journey that it takes to become a lifestyle investor and create the passive income that covers the expenses. You can do that along the journey, not just at the destination.
[TYLER]
Well, I think what's great is this place that, our age group, this gen X, millennial age group. We're really challenged now to lead the older generation baby boomer and beyond the gen Z. And that challenge to say, what do we want this to look like? How do we want to show up as leaders? And one thing that you said there is I don't have a desire to retire. I want to create a lifestyle now that I can keep doing. I look at my parents who are now in their seventies and there isn't this sense that they're pinching pennies, but I also know,] they've talked about, it's like, what if I live another 15, 20 years? What if I live 20, instead of 15? That five years is going to cost me money.
And all of a sudden, if the stock market does what it did in '08, and I have a fair amount of my assets there, man, how's that going to work as opposed to not putting yourself in that position? That's what I hear from you, is one create a lifestyle that you love to live, but two figure out what you need to do in order to maintain that, but separate this idea that I think was kind of brought into it as like work for 40 years, build up enough investments in the stock market to where you can live off of that. That's not guaranteed.
[JUSTIN]
It's not, and it's a totally like ancient and antiquated program. It doesn't work.
[TYLER]
Where did that come from?
[JUSTIN]
You know, this is like back in the days of factory workers on a schedule, on a nine to five clock, on a 40-hour work week, on a let's take care of you. The government takes care of you, your job, your company takes care of you, but that doesn't exist today. And the 401k is a far cry from a pension. I hope people understand that. And whatever you have in your 401k, like the half of that money is going to the government. You got to recognize it's not all your money. I mean, maybe you're lucky it's only 40%, but I mean, that money is going. It's not all yours. And what drives me crazy and makes me sad at the same time is this whole idea of wealth accumulation and having a nest egg approach and having all your eggs in one basket of the stock market and not being diversified.
People think they're diversified because they're in stocks and bonds. That's not diversification. And maybe throw in some cash equivalents. A lot of people are literally in stocks and bonds. That's it. Some people are in stocks, bonds, cash equivalent and that's it. It's to just accumulate money and it's this whole idea also of like net worth. So many people are focused on net worth, which is easy when you're focused on accumulation. And I think that's the wrong thing to focus on. I think you focus on cash flow because when you do, you're going to grow your net worth by default. It's a natural byproduct of it and then at the same time you're getting utility out of your dollars today, not when you're 67.
[TYLER]
Yes. Well, I mean, I think you worked in a direct sales industry for years, were involved in network marketing. It was something I stumbled into, but one of the things I realized there is we all have the opportunity if look at it this way, that we work towards developing a cash flow machine. Even if you own your business, it's really, yes, you may have something, and I know you talk about this is building up this asset that one day I may be able to cash out. Well, that's a hope. It doesn't necessarily, but what can you do with that cash that you're developing and you're building.
This is one of the lessons that my wife and I had to learn through the process of, no, we don't have a legacy in this position. What we have is a cash flow machine that gives us the opportunity to take that cash and put it somewhere else. And where are we putting that somewhere else that is either going to yield greater opportunities or something that is going to replicate itself, create passivity because whatever you're actively involved in, I believe, by definition is not passive. And if you're doing anything to lift a finger, it's not passive.
[JUSTIN]
That's right.
[TYLER]
So one of the things that I'd love for you, I know you've read Kiyosaki's Rich Dad, Poor Dad and you mentioned this earlier, the different quadrants. I have this belief and I'd love for you to break it apart from me, is so often we see people that see the different quadrants are like, well, one side is bad, one side is good. I look at that to say, well, I'm always going to work. So whether I'm working for myself, I'm still working. I'm still that employee.in essence, I just need to make sure that I have assets, I have positions in all four. If I do that, that's a diversification but it's like that to me is a sound mindset, as opposed to thinking, one side is bad. One corner is bad, the other ... what do you think about that?
[JUSTIN]
Tyler, I think there are pros and cons to all of it. I think that every quadrant matters. It's what makes our world go round. So for me, I don't actually want to be an employee. I don't really want to be in that role. I'd rather invest in the companies and have my time independent of it. But at the same time in those companies, I want employees that are working hard and learning skills. But the difference here is I'm very comfortable with employees that were teaching lesson on how they can then scale, become a business owner, do things like, I don't want to keep someone. Like, even though it's convenient, maybe it's cost effective, whatever to keep the same person for long term and there's a lot of positive to that and some roles that ends up happening, because that's just the, I would say human nature in most people.
But I'd actually like to see people that are in companies that I invest in or in companies that I've started move on and do their own things. Because I think that's cool. So do I think one's bad and one's good? No, but I think that there are some clear pros and cons to each, and it's really hard to find too many cons on the investment side where you're a capital partner. Your dollars work for you because you can always find a way to spend your time. I'm always going to, I love people, so I'm always going to pour into people in some way, shape or form, whether it be just friends hanging out, whether it be me teaching something, whether it be finances or fitness or relationships or business.
I love it. I love engaging with people, but I love knowing that I am not doing that for money, that I don't need to do it for money, that I'm not chasing a dollar. I'm not a slave to any exterior tag or pull. So I think that there are limitations to an employee. I think there are limitations to being self-employed. There's definitely a disadvantage on the tax stand point. I mean an employee and self-employed are going to get taxed way worse, at a much higher percentage than a business owner or than an investor. So a lot of the capital that they could use to invest in deals or start a business is going to Uncle Sam. That's one strong reason why to kind of get to the other side because you get to keep more of your dollars by abiding by what the IRS wants you to do with those dollars.
[TYLER]
Yes. Well, I mean, again, I think as I view that if I'm going to continue to serve people, then I'm an employee to them. That's okay. I can call my decisions right there because someone could choose to show up to work or not. There's consequences. But I agree that that's, if we try to get too heavy one side or the other, if we profess as leaders, it's like, well that's wrong. It's like, well, it needs it all ecologically to work and it's how can we make sure, and I love this idea and what you really alluded to is helping people grow through that process. Hey, I want you to grow. I want you to evolve. I want you to see opportunities that maybe you work because you love to teach. So you're a teacher, but yet at the same point you're buying rental houses. Or maybe you have another side business that you're doing at some other point that can become passive. That's just smart. I believe you look at people that are of great wisdom. That's how they went about life.
[JUSTIN]
And another point is like, if you love what you do, you're in rare air. So you can be an employee and love what you do. You can be self-employed and love what you do. So I think most people don't, but if you do, that's amazing because people work their whole life and search their whole life to be able to find that. So if you are one of the few that has it, congratulations. That's amazing. I think other people could love what they do if they weren't bound to a time restriction.
So let's say that you get enough passive income that you don't have to work. Well, now it's a different setup. Now you don't have to do anything. You get to do something and you get to choose what you do and for how long in a day and how much time do you take off? Do you do this every day? Do you do this five days a week? Do you do it three days a week? Or do you do it four days a week, but only three hours a day? When you have that luxury of flexibility and being in control, it's totally different. So you might take the same job, but you didn't like it 40 or 60 hours a week, but at 20 hours a week, you love it.
[TYLER]
And you almost perform as, if not better than what you did otherwise because, and I've been there. It's like, I want to do this because I love doing it, not because I have to. And all of a sudden you perform way better.
[JUSTIN]
That's right. Well, and for people that have done the same job or a similar job for 10 years, you've got the equivalent of mastery. So you can get a lot more done in a lot less time. So it's really interesting to see you've got like a lot of attorneys that I know and a lot of doctors that I know are big time workaholics. The more they work, the more money they make. It's based on their time typically, unless they've built some sort of business, which most of them have not. But what ends up happening is even though they have enough money they keep working these same crazy hours, and they don't want to do what they're doing. They like dread what they're are doing, but they have this pattern, this routine, this habit, this is all that they know.
It's so amazing with, I've helped several people through this, specifically doctors and attorneys where the conversation is how much do you need? What's your cost? Okay, what does it cost you to live? Okay, what do you have right now? How do we get this out? Let's say that we do that. And then you watch them transition from 40 to 60 hours to 20 hours or 15 hours and they go back to loving what they do. It's totally on their time. It's so great and then they're loving life because they're not going to, like this whole idea of retiring and doing nothing and sitting on an island will get old. And if you don't believe me, go talk to anyone that's ever done it. I mean ---
[TYLER]
Because they either hate it or they've died. It's just the way it is. And I think a certain part of our body and soul is meant to serve and work and the day that we don't have something, we're just like, "I'm lost. What do I need?"
[JUSTIN]
Yes, you need meaning. You need passion. And then the other thing is, like another great case study is talk to people who are about to die, on their last leg and get words of wisdom from them, because you're always going to hear that it has nothing to do with getting more money or more possessions or that it's not going with them. So the lessons that you get are, "I wish I had spent more time with this person. I'm glad that invested in this relationship. I'm so pleased with these people who come and see me and support me." It's like it's all relationship based and growth based and giving based. So if you could figure that out early on and incorporate that into your world, you got such a stronger likelihood of living a life of meaning and purpose that you're fulfilled by.
So for so many people, they like have to make all this money to realize that the money doesn't matter, like when whatever dollar amount you want to make, when you get there, it's never enough. You always want more. You always move the goal post. So it's not about the dollars. There's no dollar amount where you're going to be like, okay, this feels good. And also the celebration is way less than what you think it's going to be. Like, you might celebrate it for a day a week and then it's gone. So it's not about the dollars, but you get a lot of people that get addicted to it. They get addicted to success, ego, net worth, control. And I just feel like that's one of the worst forms of addiction.
[TYLER]
Man, I appreciate what you're saying and having been there at times in my life and thinking okay, I think one of the, the biggest lessons that I had to learn through is my money mindset, my money blueprint. Thankful for the book, Secrets of Millionaire Mind by T. Harv Eker. That really helped me break out of that. My wife and I also went through a Bible study program that really helped us grow there. I'd recommend that to everyone, especially getting married. Go through that conversation because I had to, and it was a big difference. Let me kind of ---
[JUSTIN]
And it was incredible to get on the same page.
[TYLER]
To me, it was, as I look and I hear from so many I believe this, that the number one issue in marriage, this is not a marriage podcast, but just sharing experience is communication. As it's been evident and I see, and really in a lot of workplaces, that financial understanding, you know why do you look at finances the way you did? I grew up in my home and my mom, every day we were broke, we were broke, we were broke, we were broke. So as I learned, she naturally was working towards zero and it's having to of break myself out of that. I know you talk a little bit about that in your book and the stuff you've done and I think that's so important.
So the question is, okay, I'm listening to this, I'm a leader. I'm trying to help my people learn this as well, but I got to go home and talk to my wife. I say to my wife who maybe is like, well, I feel safe having our money where it's at, because it's institutionalized. How do you open up that discussion and say, "Let's look at this differently because we share this together. We're in this together." How can we start to have that conversation? What would you suggest?
[JUSTIN]
I think the biggest thing is just kind of poke holes in it. I mean, look at the institutions that have produced negative returns, look at the institutions that have folded, that have literally gone out of business, big time institutions. Look at the ones that have been bailed out, look at the ones that are totally corrupt and are abusing their customers and clients, like, I mean literally every major bank in the United States. It's such a shame.
[TYLER]
The reason I'm smiling and laughing, not to interrupt is I read the book Lights Out. It was about GE and GE is no longer part of the doubt industrial. As you read that book, they learned how to cook their books so they always had a positive return. And it's, as you say that, that's what I think about.
[JUSTIN]
Totally. It's Enron book, the same thing. I mean, it's crazy. They're like, I mean, so far behind, totally corrupt, totally like so negative in money yet showing a profit. I mean, there's so many ways to manipulate it based on the, just the way that we calculate profit and loss today. And I mean, we could do a whole podcast on that.
[TYLER]
All the different ways, yes.
[JUSTIN]
There's a lot of crooked organizations out there and they care about making money, even at the expense of integrity and doing the right thing by their customers and their clients. So it really is a shame what a lot of the institutional game is like, and what these companies are like. But I think if you show some of those, I think that that can expose some things more than anything though. It's showing the utility. Okay, we're in this institutional play, we're going to make four, five, 6% on our money. We're likely going to have no dividends. If we do, it's going to be small. We're probably going to reinvest it versus you buy an asset with the same dollars and it produces some sort of cash flow. Let's talk about specifically a cash flowing asset. There are tons of tons of ways to structure them. But you can show the utility.
It's like, okay, what's our mortgage or what's our rent? Well, it's $2,500 a year, it's $1,500 a year, whatever it is. Well, when we have this much invested in real estate or in senior secured debts that is collateralized at a greater amount than the value of the loan money, so you can't lose, then we don't have to pay at the mortgage. The investment pays the mortgage, or we can just keep accumulating over here with this institution. And by the way, take it one step further. You're earning 6%. You got inflation, let's call it 3%. You're down to 3%. You got taxes. You're down to 2%. You've got fees that you owe on it. You're down to 1%. So now you're making 1%.
And I argue, by the way that most people who think they're making money are not. When you factor in all fees, all taxes, inflation, I mean, you really have to be earning around 10% to be making money. If you're making less than that, you're losing money on your dollars. And it may take time for people to realize that, you might not realize it for 10 years down the road, but at some point, if you run the numbers, you're going to see because inflation is probably closer to five to 7%, not 2% to 3%, and just pay attention to how everything's increasing and how much it is increasing every year.
[TYLER]
Yes, well, it's something again, when I open this up and vulnerably say it makes me anxious, not that I don't agree with it. It's just kind of like, okay, great, now I agree. And when I look at those things, it's like, how do you start to unwind it? And I think that's where it's like there's a process to unwind, but there's also a process of say, "Hey, how do we look at it going forward? What do we do with this going forward?" One of the great things that I've heard you share is just start small. Whatever you do, start small and knowing that you're moving in the right direction and allow that over time to cascade, as opposed to, oh my goodness, I have to make this great declaration today. It's just be willing to kind of fall forward if it is a good description there.
[JUSTIN]
Totally. And with my last example, I didn't even give like the full perk of buying assets. I gave you the negative. You're probably making negative 1% or negative 2% in your money, if all you're getting is an institutional type of return if you're just getting some sort of like a stock market type of return. At least in the long haul, you know we've had a nice run here recently, but that was after a crash, but when you buy an asset, not only are you paying for expenses with that cash flow, but the asset itself is appreciating 10 to 15% per year in most cases. So your money's growing and you're getting cash flow today. So it it's night and day. The two ways to invest are completely night and day.
[TYLER]
Yes. Well, it is something that, it comes to the comfort level and it's where people are comfortable. And I think that is important, but it's also, there's no one way to do it. So being able to look at it. So I appreciate you spending time with me today, excited for people to go learn more about the Lifestyle Investor, check out everything you have going on, your new book. Again, thankful for the conversation and to actually connect and be able to call you a friend.
[JUSTIN]
Well, thank you, Tyler. This has been absolutely awesome. I love how many friends we have in common and just really being in such a similar place in life. For your audience that has any interest in the Lifestyle Investor book, I just want to let you know that all the proceeds of the book are going to charity. It goes to an organization called Love Justice International. They stop human trafficking or sex slavery, to really say what it is of children in 17 countries around the world. So it's really just an impressive feat. I'm going to share a number with you, which is really sad, but last month they rescued over 500 children in the month that were being sex trafficked.
So I just believe even this cause and this mission. So I want to expose people to this organization. So you can certainly get my book on Amazon or you can get it on my website at justindonald.com/freebook. If you do free book, then you pay the shipping. I'll send it to you and I'm still going to donate those proceeds to Love Justice. So either way you can pay full retail, you can get it for free or you can go through my site and just go forward slash book if you want to pay for it and go through that way and get some extra bonus material and perks and all that kind of stuff. Actually go to lifestyleinvestor.com/freebook.
[TYLER]
Okay, well, appreciate it, man. Thank you. And until we catch up again stay well and enjoy, Austin.
[JUSTIN]
Sounds good. Thanks, Tyler. You have a great one.
[TYLER]
One of the greatest things that I feel Justin described there was his experience with this penthouse. We make a joke about it, but I really appreciate that. One of the things that I found in my experience in life is we all go through challenges. We all have moments that are like, ah, that won't show up on our highlight reel. Some people are vulnerable with those. Some people aren't. Man, I love to learn from those opportunities because it really shows what's possible and also it's like, oh, let's not repeat that again. How do we make that better? It's an adage that a lot of people have and others don't. At the same point, I appreciate Justin being open with that. I'm glad that I had the opportunity to speak with Justin. I hope you got value out of it.
To me, again, it's a leadership conversation. It may not feel like some of the other leadership conversations, but I really come back to, if you view the world in a scarcity mindset, you don't know how to leverage your money. You don't know how to make your money work for you. You fall into patterns. Man that's going to show up in the rest of your life. As I mentioned in the podcast, one of the books that I read, and if this is a challenge for you, Secrets of the Millionaire Mind really opened up my mind to a whole different world of thinking. It really opened up my mind into changing my mindset. I'm thankful for the book Mindset by Carol Dweck because that really helped me understand, oh, there's fixed and there's growth. And man, I'm going to choose growth every single day, because that's just a healthier way to live.
Justin shared that and I appreciate it and I hope you got value out of that. Again, you can go to tylerdickerhoof.com/podcast. You can click on the show notes there. You can click on the link wherever you're listening to it. Go find out more about Justin, the Lifestyle Investor, grab his book. And I loved what he shared about Love Justice, an organization I didn't know about before that. It truly, to me as, I didn't know that about Justin. Man, it makes me want to work with people like him. I hope you get that with me. I hope you'll understand that I'm here to share my heart and add value to you.
If so, if you're getting value out of this, man, let me know, give me a rating and a review. If I earned a five star, great. If I earned a one star, let me know. I want to get better. Hit that subscribe button and share this with someone that you think will get value as well. Thanks for being here again and I will see you on the next episode.
