Why Entrepreneurs NEED Multiple Streams of Passive Income with Chris Miles: An EOFire Classic from 2021

0:02Who's ready to rock today, Fire Nation? JLD here and welcome to Entrepreneurs on Fire. brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like Content is Profit. Today, we're pulling a classic episode from the archives, and we'll be breaking down why entrepreneurs need multiple streams of passive income. To drop these value bombs, I brought Chris Miles into EO Fire Studios. Chris is the anti-financial advisor. He teaches entrepreneurs and professionals how to get their money working for them. Today, he's an author and podcast host of the Chris Miles Money Show.

0:33In today's foundation, we'll talk about not getting caught in an entrepreneur trap where you really don't have a job. You might make millions of dollars in your business, but when that shuts down and you're in trouble, you'll be stuck. You must have multiple streams of income and so much more. And a big thank you for sponsoring today's episode goes to Chris and our sponsors. Imperfect Action, hosted by Steph Taylor, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Imperfect Action is a bite-sized online marketing podcast for business owners who want to get straight to the point.

1:02Join Steph Taylor as she answers all your business marketing questions. Recent episodes include five must-knows to sell your online course, program, or membership, and four steps to grow your email list for your next launch. Listen to Imperfect Action wherever you get your podcasts. Chris, say what's up to Fire Nation, and what's something you believe about becoming successful that most people disagree with? Yeah, what up, Fire Nation? Hey, the thing I disagree with is you got to hustle your entire life to be successful, right? it's always about work 180 hours a week and all that kind of stuff and get out there and grind.

1:38And the thing that I've learned is that you definitely got to be consistent. You got to put in effort, especially up front. But man, you do not have to hustle and work 5 billion hours a week to be successful. It's about consistency and doing the right things, not just working your tail off. Could not agree more. That is my philosophy as well. I will say you go through seasons in life, in my opinion. I had to work my little booty off a lot of hours at the beginning of my business to get it off the ground. It's like this momentum is so hard. But man, once you start to understand what levers to pull, leverage to use, and how to scale and automate and create systems, things just get easier and easier and easier.

2:18And I'm not saying they ever get easy, but they get easier than that really hard beginning part of your business. And I've definitely seen that with me going forward. I know a lot of people I talked to have felt the same. So way to start this episode off because Findation, we're talking about why. Why do entrepreneurs need multiple streams of passive income? So let's first start by talking about why Fire Nation specifically needs to stop listening to traditional money advice from the media, who by the way are clueless about everything, and advisors in general. We've been taught our whole lives, right?

2:54Like the smart thing to do, quote unquote, is to save everything, spend nothing, save it forever, put it away, take it away from your business even, right? So that someday you might have something because you gamble at some crappy mutual fund. And the truth is that advice has never, ever worked. And the way is, I know that's because 19 years ago, I started as that traditional financial advisor, right? I was given that advice. And then someone who was a business owner and they were even in real estate and things like that, they said, well, Chris, let me ask you, how many of your clients are financially free off those plans.

3:26I said, well, none of them, like even the ones that are retired still worry about money. They're not really free. He's like, all right, Chris, well, how about this? You guys as advisors, you guys should have it figured out over anybody. And I know there's guys in your office have been working since the late seventies. How many of you guys are financially free? Not off the commissions you're earning, but actually doing those investments. I said, none. He's like, well, there's your problem. You know, why are we following this crappy advice? And so, you know, I got away from that and I realized that, no, that wealth has been built historically.

3:57If you look at the evidence, right, which I like to look at, I like to look at what's really worked, real results. It's been entrepreneurs and it's been investors, right? Those are the people that actually do it, not people that go and throw their money in crappy 401ks and things like that. It's about really buying into creating acceleration of your money, not just accumulating your money. Fire Nation, so many wise words from Chris. And remember, this is the guy that has the Chris Miles Money Show. This is his third time on Entrepreneurs on Fire. So if you remember some of the other value bombs he's dropped, you know he's here to speak truth in fire.

4:28Because we want to know this, Chris. What is required to actually be financially free? Like just not, you know, doing good and feeling good, but we're talking about financial freedom. What is required for that? You've got to have passive streams of income coming in to replace or be able to cover your expenses, right? You know, there's this common myth out there. or maybe this is number two of common thing that I don't agree with, but many people will say, hey, I'm reinvesting in my business, right? Like I'm reinvesting in it. Well, the truth is if you keep spending money in your business, you're not reinvesting, you're just spending money.

5:01You don't have any profit and you got to have profit, right? You got to have extra surplus because otherwise if you keep reinvesting in it, which is great, I like, I like investing in my business too. And I want to get the best rate of return possible when I do that. But you can't just keep doing that where it becomes a habit. People become habitually stuck in the rat race because they keep doing that. And so you need other streams of income coming in too because, hey, what if somebody decides your business is quote-unquote non-essential like what we heard in 2020, right, and all that kind of junk?

5:33That kind of stuff can just cripple you and your family. And so you've got to have those multiple streams of passive income coming in so that if any one stream of your income is jeopardized, especially if it's your business or your job, if that's jeopardized your main source of income, you got to make sure you have other streams of income keeping you safe and keeping you free. And that's when you get that real freedom. When you work because you want to, not because you have to, where you know that, Hey, everything I'm doing, my business is just gravy. This is just fun for me. Like, and I'll tell you, here's the secret.

6:03The more you don't need money, the more that you are free, the more that people want to pay you. And John, I know you understand this because you're in this situation. The more, more money you make, the more you don't need people's money. They want to throw money at you. Well, that, and what's interesting, Chris, is they want to like give you stuff for free. It's like, I can finally afford to do stuff like fly places and stay in the best hotel rooms and all this stuff. But now people just want to give all those things to me for free too. Exactly. It's like, man, I get so much crap. It's like, I mean, it's good stuff.

6:30I love it. And I love that. But it's, yeah, like things just are attracted to you more naturally. And that's where that real freedom comes in. One thing that I love about you, Chris, is you're specific. Like you really get down to the nitty gritty. You give really detailed, actionable advice. So share with us right now. the two streams of income that we need, that we specifically need to free ourselves from our businesses? Yeah, there's two main ones, right? So one is what I refer to as residual income. So residual income is income you get through your business. And the second one is passive income, which is income that comes from investments, right?

7:04Outside of your business. Now I know, John, you're like the master of residual income within your business. I mean, you even show everybody what your residual income is coming in, right? Everybody needs to have some sort of income that comes in that doesn't require active effort, right? You might manage it, but it's not meaning that you have to work, you know, your tail off each and every day. You know, whether this is online products or services, it's memberships or whatever it might be. You know, you got sponsorships like with the podcast, right? You got things like that. Things that don't require you to have to keep working all the time.

7:34You can create a system and it pays you all the time. And that's resale to your income. By the way, joint ventures are awesome. Affiliate opportunities, things like that. That's actually how I was able to retire the first time in 2006. I became financially independent when I was like, wait, I've got enough income coming in, working a couple hours a week. This is before Tim wore out the four-hour work week. I was living it because I had these connections of people that when other people would ask me questions, they'd say, hey, Chris, who do you know that does blank? I would say, go talk to this person.

8:03And if I kept getting that question over and over, I thought maybe I should create an agreement with this person and say, hey, if I send you business, do you have some sort of referral agreement? and voila, next thing you know, you've got money coming in and you're not having to be the one actively fulfilling on that, right? So that's residual streams of income. Passive streams is what you do to get your money making money for you. And this is the thing I have a lot of fun with, right? This is what I've been able to do even when I retired the second time in 2016, where in addition to the business streams, then I start bringing in things like real estate, like passive income that comes from that, where I'm getting paid each and every month.

8:37It could be different types of funds or whatever it might be, but there's so many cool ways that you can get your money paying you. So again, you work because you want to, not because you have to. I love the phrase money making money, and I just love the visualization and the reality of money making money in Fire Nation. It is the honest to goodness truth, which is why we're going to be talking right now about where we can find the cash to create that passive income flow. because that's what a lot of people are saying. They're like, okay, I get that money makes money, but where's the money? Where's the cash?

9:10So where can we find it? That and other things coming up as soon as we get back from thanking our sponsors. If you're a startup with big goals, then it's important to find a CRM that can keep up, but I get it. When you're in startup mode, it can be tough to know which platform is right for you and your business. Here's the good news. From marketing and sales to supporting content and everything in between, HubSpot's all on one. Customer platform has startups covered. And with the HubSpot for Startups program, you can save 30 to 90 % on a platform that scales right along with you, increase leads, boost revenue, improve your customer experience.

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10:18It not only allows us to share this magical island in our community with those visiting, it's also a great way to earn some extra income. We've had a number of guests rave about how special their vacation was as a result of staying in a place that is so beautiful that it felt like home. This is a big reason why we originally got into hosting. We know what it's like to travel and want to have a place to call home. So we figured why not create that feeling for others? Next month, we'll be traveling to meet up with friends on the West Coast and knowing how easy it is to host on Airbnb, we're considering putting our own home up on Airbnb while we're away to earn some additional income.

10:51Maybe you have an upcoming trip planned as well. while you're away. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. So Chris, we're back. And as we teased before the break, listen, money makes money. There's a reason why the rich get richer because they know how to make their current money work for them. Leverage scale, compound. It works unbelievably well. What did Warren Buffett say? The eighth wonder of the world is compound interest. I mean, it is so very true. But again, there's people out there and you've been there. I've been there where we're like, well, it'd be nice if my money can make money, but I don't have any money.

11:27So where exactly can we find the cash to create passive income now? You bet. There's three things you want to look at, right? I call these the three gets, right? There's get lean, get liquid, and get out, right? So get lean. I mean, this in 2020 was kind of an easy practice for a lot of people because a lot of us did get leaner. I mean, especially when we couldn't travel or do some of the things that we normally do. Naturally, we were spending less, right? And I'm not saying be cheap. Like, I don't, I don't like that. Like, I don't like when people just say, I'm going to cut out of everything out of my life.

11:59Like, that's not the point. The point is, you know, what is it that I have in my business that I'm spending right now that maybe is not serving me? You know, maybe that marketing strategy isn't producing the results I want. Maybe I should cut that out. You know, maybe that employee is not working as well as I want. You know, maybe at home, like, hey, maybe these subscriptions I've got, or, you know, maybe the things I'm spending on right here, isn't really giving me what I want. You know, get rid of those things, get lean, get to the point where it's easy to be able to replace your expenses, right?

12:27To be able to replace the income that can pay for your expenses. So that's get lean, get liquid means let's have cash on hand. Cause the one thing I didn't do early on in business is I never kept cash on hand. I kept quote unquote reinvesting in my business, right? So I would just take enough money home to be able to take care of the family's needs, but I wouldn't have any surplus. So of course, when you have that little down month, all the stress comes in, you're like, oh, what am I going to do? I got to start hustling to make more sales or make more money, right? And you never want to be in that place, because then you start reeking of business breath, as I like to call it, right?

13:02You just reek of desperation. And when you stink so bad of desperation, people want to run away from you. And then you have to work three times as hard just to make the same amount of money you would if you just relaxed. So having cash on hand, right? Having that savings, having the money available, right? You know, it's huge, you know, and that kind of goes along with getting out, you know, for example, you know, right now, a lot of our houses are at all time highs and the value, if you own a home, you're looking at a house that actually has equity. Can we get the equity out? Can we get a line of credit to get that money out and available to use to be able to make more money for us?

13:37Do you have money tied up in the crappy stock market that it makes zero sense and you have zero control. I mean, look at things that happen with GameStop. I mean, there's all kinds of manipulation happening and you have zero control as an average person. So should you get money out of the market or could you get that money to put into your business or could you get that money to do something else that creates more passive income? So that's what I mean by getting liquid, get lean, get liquid, then get out. Get that money available to you so that then you can turn around and make it work for you.

14:06I love that phrase, get lean, get liquid, get out. Because Fire Nation, this is something that we can all practically do right now in our lives to start taking a step forward. I mean, it is such a heartbreaker when you see somebody that's just like, oh my God, look at GameStop. It went from like three to 360. I need to get in before it goes up to a thousand. And then it goes down to 50, 40 and below. And it's just like, oh man, because it's just so brutal because that is money that they could have used in a very positive and proactive way. I mean, there are times and ways to invest in the stock market and other commodities and this and that for sure, real estate.

14:42But to get going, this is the process. And let's talk about financial advisors. Because, you know, if you would listen to the commercials and all of the pizzazz this, pizzazz that, we have to be working with a financial advisor or we're done. Is that true? Do we have to work with a financial advisor, Chris? Not at all. No. I mean, most financial advisors aren't really advisors. They're really just financial salespeople in suits, right? I mean, that's what I was back in the early 2000s. Me too, by the way. Oh, yeah? You're basically selling the financial version of Mexican food, right? It's all the same ingredients.

15:15It's all meat, tortillas, lettuce, tomatoes, salsa. It's all the same stuff. You just repackage it differently. It's basically just all mutual funds or insurance products. That's all it is. And, and you think that they're trying to give you advice to become free, but they really don't. They're just trying to sell you junk to throw your money into while those, like the financial companies they work for make more money than you do. Right. That's, that's why, like, but the problem is we've been trained that we have to have a financial advisor, that we have to have somebody telling us what to do. But the truth is you're an entrepreneur.

15:47You're your own boss. You should be the boss of your own money because nobody should care about your money more than you. So you take control of your own money. And I'm not saying you don't need some counsel from time to time, right? But you do not need the traditional financial advisor that's going to just sell you the same old Mexican food of financial advice. And it's true. I look back and you know, listen, I was clueless and then I was trained. And so I knew what I was trained, but I wasn't trained with the ways we're going to be best for my clients. I was trained in the ways are going to be best for my employer.

16:19So I look back at like some of the, you know, front load mutual funds I would be pushing on people, which, you know, I thought were fantastic. Cause they're like, look at the returns that your clients get from this. And I was like, Oh, that looks amazing. And I just didn't, I was, you know, mid twenties and I didn't know any better. And looking back, I'm like, Oh my God, those were terrible, just money eating funds. And it's, it's just sad that that exists out there. So you need to be listening to this type of content, Fire Nation. And let's start talking about an anti-financial plan. It kind of sounds weird, an anti-financial plan, but let's talk about it, Chris.

16:53What exactly is an anti-financial plan? It's really rejecting the same stuff like you just mentioned, right? I mean, even with the fees, even if you get Vanguard funds or whatever, right? The truth is you're lucky to average over a long period of time, seven or 8%. And the truth is after fees, you might make 6 % a year if you're lucky. But at the same time, you got inflation and everything else, you can never really save enough to become free in those kinds of plans. So an anti-financial plan says, listen, we don't have to go that route. Let's go around it. Let's do what's actually been proven.

17:26How do we invest better in our businesses? How do we invest better outside of those stock markets? You know, like for example, like I just closed on a couple of properties in Alabama, right? You know, now I don't manage these properties. I don't do anything with them. All I had to do was buy them, get the mortgages on them, close, and then a property manager does all the work for me. I don't even know my tenants' names, right? But the cool thing is I'm making about a 13 % cash-on-cash return every year. So it was like$80 ,000 out of pocket, but I'm making about$900 a month. And that's not including any appreciation, tax benefits, or that's tax-free and everything else.

18:00So that's kind of outside-of-the-box type of things you do that financial advisors do not offer because they can't make a commission off of it, right? Right. And those are some of the best things, the things you can't that people can't make commissions on. That's some of the best stuff. You know, let me give you an example. One of my clients, a chiropractor down in San Diego, I mean, he's been like the ultimate saver, Dave Ramsey poster child, right? Like Dave Ramsey would like, would be glowing, you know, and just how much he would love this guy because this guy was, had paid off all his debt other than his own mortgage and his investment property mortgage.

18:33But he was six years away from paying it off. And I said, I'm like, listen, let's look at it. And of course he's in California. So prices are horribly high and the rents are horribly low, right? Just horrible to try to make rentals work anywhere in the Western half of the United States. And so I said, listen, you've got over a half million of equity in this property, but you're only profiting 200 bucks a month. If we can get that half million out and even if we only make a net 10 % on putting in other types of real estate away from California, that's$50 ,000 a year. And he had equity in his own home too.

19:05I said, listen, you're paying way too much on the payment of your home. Let's refinance. We can even get cash out. You could have the same or less payment and again, make another$25 ,000 a year. So in essence, he could be making$75 ,000 more a year versus scrimping and saving, trying to pay off the mortgages in six years to only free up$4 ,000 a month. So that's the difference, It's like$4 ,000 a month in six years, or do I want$6 ,000 a month this year? And then by the time I hit those six years, I'll be over$100 ,000 a year of passive income. I mean that's real freedom. When you have that profit and that money coming in, that's where the stress is there.

19:41It's not about the mortgage payment or the mortgage balance even. It's about how much extra cash you have coming in above and beyond what you need. The more you have, the more freedom you experience. and there. That is the stuff that financial advisors don't do. And that's why you got to go the anti-financial route. Chris, you've given us a ton of advice today. A lot to think about, by the way. And hopefully some people in the audience are already thinking about unwinding certain things that they're currently in right now so that they can go the anti-financial plan route. What's the one takeaway you really want to make sure Fire Nation gets?

20:16Then share the best way that we can connect with you to learn more about what you have going on. And then we'll say goodbye. You know, the biggest thing I want you to understand is that in business, do not get caught in the entrepreneur trap where you really don't have a job. You don't have a business that you own. You have a job and you might make millions and millions of dollars in that business. But if that business were to shut down now and you're in trouble, then that's something to be aware of, right? You need multiple streams of income and there's lots of hope to be able to create that, create that freedom and seriously live the life that you dreamed as an entrepreneur in the first place.

20:47Fire Nation, you're the average of the five people you spend the most time with. And hello, you've been hanging out with CM and JLD today. So keep up that heat. And Chris, where's Fire Nation going to learn more about you at? You know, you can go to my website, moneyripples.com. That's M-O-N-E-Y-R-I-P-P-L-E-S.com. Or like you said at the beginning of the show, you can just go to my podcast, The Chris Miles Money Show. Fire Nation, head over to eofire.com. Type Chris in the search bar because this is not his first episode on Entrepreneurs on Fire. You can listen to this episode again and the prior two as well.

21:20Value bombs were dropped on each and every one of them. And Chris, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we will catch you on the flip side. Hey, Fire Nation. Today's value bomb content was brought to you by Chris and I have identified over the years that successful entrepreneurs, they're productive, they're disciplined, they're focused, which is why I created The Mastery Journal. It is a gorgeous full of the journal that will ensure that you master productivity, discipline, and focus in 100 days. It is my best work ever.