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The Entrepreneur DNA
House Rich, Cash Poor: The Debt Trap Killing Your Financial Freedom | Chris Naugle | EP 80
00:39:05
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- [00:01]
Sponsor Voice
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- [02:12]
Justin
What is up Entrepreneur DNA Family welcome back to another episode and this one is going to be great. He has been on twice before on the Science of Flipping and again. Entrepreneur Nord. This is the third time my close friend, business partner, financial wizard Chris Nole is with us. What is happening brother?
- [02:32]
Chris Noggle
Oh, not much man. Lots happening. But you know we're going to get into that, I believe.
- [02:36]
Justin
Yeah, listen, you and I have done real estate for, I mean cumulatively like almost 40 years, right? Between the two of us, getting old isn't that crazy to say, by the way.
- [02:46]
Chris Noggle
It's very crazy to say. I mean, I. I got a birthday coming up on Monday. I'll be 48. And I'm just like, holy crap, I'm closing in on 50, dude.
- [02:55]
Justin
I. Me and my wife just said the same thing, man. It's. And, dude, you and I are young. Like, we're vibrant. We're not. When you. When you're young, for all you whipper snappers out there, you feel like 48, 50. I'm 44. I'll be turning 45. Like, that sounds like an old person, right? Like, I don't feel that much different than when I was 25. Like, I don't. I mean, physically, a little bit, but not much.
- [03:21]
Chris Noggle
I. I'm gonna say I do, but, you know, I was a professional athlete back in those days, and now here's the biggest difference. It's not that I feel like I'm out of shape or I feel like I can't accomplish things. It just takes a lot more effort to get to that level, to that peak level. Like, I'll give you an example. Like, I. I work out, and I run a lot, and I swim a lot. And running this year, for some reason, I felt like I was dragging logs. And now, like, I do. I jog, and then I run full out. And here's a cool thing. At first, it sucked. I hated it. But I push through it, and I just. Every day that I run, I push even harder. This morning, what I do is I'll pick a point to start running as fast as I can, and I know I'm going to hate it. I'm dreading it. Up to that point, I hit it, I go all out. And the goal is I pick a point that I'm going to run all out to. When I get to that point, I'm like, nope, we're going to the next one. And then I get to that point, and I'm, like, dead. And I'm like, nope, I'm going to the next one. And as I've done that, I've been able to, like, push past levels that I would have been at when I was in my 20s, but it's. It's come at a major. It's just hard, man. It's gentle, freaking.
- [04:31]
Justin
That's your maturity, right? Like, the difference is you now have the maturity of fortitude and pushing through where you say, okay, you know, I know if I run two more minutes, it is the L, like, that broke my PR by two minutes. I don't want to, but I know what that will do for my mentality and my conf. I mean that's just a maturity thing, is to be able to push harder. But I think it starts with your mental of understanding what you want really and then what you need to do to get it. Before you were just going and getting it because you were young and right, you had the energy, you could just do it.
- [05:03]
Chris Noggle
And now it's just like what I just mentioned with running. That's how I do everything in my life. That's how I run my business is I push and push and push until it freaking hurts and then I push harder. I do it with every single thing and it literally, it's not so much physical anymore. It's mental. It's 1000% mental.
- [05:21]
Justin
Yep, I love it. So let's get into the subject just because I think you and I could go on tangents like we do. So listen, we've been in real estate for almost 40 years. Cumulatively we've done thousands and thousands and thousands of deals between the two of us. We have helped tens of thousands of people. We've spoken on stages. One thing you and I can relate on is the economic status of the, the, the country in real estate. Right. Understanding the financials and I know and you agree people are house rich and cash poor right now and that is not a great place for our country to be.
- [05:59]
Chris Noggle
Not at all. Not at all. And you know, it's very interesting. You know, I study economics, kind of like a nerd. It's one of those weird dry things that I just love. And recently I was out in Puerto Rico for a business event and a chief investment officer of one of the giant mutually owned insurance companies we work with was up there. And he's talking about the economic conditions of the country. He's talking about the big beautiful bill, the impact that's having on, on folks or will have on average Americans as well as businesses. But he said some things that really were amazing. And let me preface what he said. He's talking about the problems about in America. He's. He's talking that during COVID savings rates were way up and debts were being paid down. And he said that was really good. But then when the country opened back up, savings were spent down and debts were on the climb. And now we are at a point where we are at all time highs with debts, delinquencies on credit cards, car loans, student loans, and pretty much all debts are climbing at alarming rates, meaning people are delinquent on their debt obligations. But then he throws a left hook like a Mike Tyson left at us. And he says, but for the first time in American history, Americans debt to asset ratio is the lowest it's ever been. And this like, it just stunned me because I'm like, yep, I know debts are all time highs. Oh, I know people are struggling out there. I'm seeing it firsthand. You know, all of our clients were hearing it. You know, money's tight, cash is tight. But yet then he drops a bomb saying, but the debts are at all time highs, Delinquents are all time high, but people's assets are even higher in the ratio between debt to assets is the lowest. And I'm just like, I didn't know that. But it made perfect sense.
- [07:45]
Justin
Yeah.
- [07:45]
Chris Noggle
Since COVID real estate prices have skyrocketed. Even in my little Buffalo, New York, real estate prices are at all. They're crazy. I just watched a house in my neighborhood sell for $2.4 million. I'm like, who is the idiot that paid that? But like, that's the new reality. So the whole point of what he was saying is the stress people are under right now is because they're living a debt induced life. Because that's how they're maintaining their lifestyle is by debt, by borrowing and borrowing. Now unemployment numbers are low, so they're supporting the debt, but you're starting to see the cracks in the foundation. But he said the reason people keep spending to maintain this standard of living is because when they look on paper or meet with their advisors or their accountants, they, they're like, look at all this equity. I've got all this equity in my house, my 401ks at all time highs. But that isn't translating down to cash flow. And that is where the problem is.
- [08:39]
Justin
Yeah, because you can't. I mean, listen, you and I both know you can do helocs and there's ways to liquidate equity for sure. Right.
- [08:46]
Chris Noggle
But it comes at a cost.
- [08:47]
Justin
But it comes at a cost. And the reality is if you don't actually change your mental state, meaning if you live a financial life that you actually can't afford from your paycheck, then let's just say you go rip out, I'm going to make a number up $250,000 of equity at your house and you actually get it, and then you go pay off your credit cards or you go pay off your debt and you haven't changed your habits, you haven't changed how you're actually living. It is going to Be the cycle that can break the financial world again because no one's changing their habits. I will, I, I don't study economics. I just have a little bit of common sense to me. Just a little bit.
- [09:24]
Chris Noggle
That's all you need really, some logic. Yeah.
- [09:27]
Justin
Listen, if people don't change, there is going to be a massive crash to our financial world. Right. Because it's not necessarily the banks, in my opinion this time. Some of it, don't get me wrong, but I will make the argument what you just said is people's habits, which started by the way, in the run up to Covid, the financial world from 2012 to 2021 was immaculate. If you guys weren't making money during that decade, you weren't breathing. Like I don't know what to tell you. If you were an entrepreneur, if you were in real estate, if you were in the financial sector, if you were doing insurance, if you were doing anything Chris does or I do, you crushed it for a decade like there was no other way. The wind was at our back. Everyone was getting rich. Appreciation of real estate was going rampant. Lending was easier. Like it was just wild and that built in and inherent. I can always have this. This is how life is now. Right. And then Covid and you know, they printed a bajillion dollars, that's the real number, bajillion dollars. And it crushed us. It crushed everyone. Not necessarily like crying, like you know, mentally upset. It changed everyone's habitual workings because loans were being forgiven, interest rates were like at 2%. Like it just then increased. Pour gasoline on our habits and how we look at financials and how we look at money. And the run up into Covid hurt us. Covid crushed us because of how we think about money, how we think about debt and how we actually act. To your point, your, your guy was talking about everyone's credit cards were maxed out, defaults are incredibly high, blah, blah, blah, blah. But because they say, oh, my home's now worth a million dollars and I bought it for 600,000, they just think there's 400 grand that like they can just go grab. And they're not changing how they're acting. So even if they go grab 200 of that, pay off their credit cards, they're going to keep acting the same. That is the big challenge.
- [11:33]
Chris Noggle
Yeah, it's the habit. And, and they're one in the sickest part about it, the logical part, we'll go back to logic, is they're one step away from a complete, completely life changing financial Move. And you already, you laid it all out. So let's just say you got. Joe Schmo's got a house. He bought it for 600 and it's now worth a million $400,000 in equity. Let's say he's also got a bunch of debt which is strapping him every single month from a cash flow standpoint because he can't, he's making great money, but he can't really make more. He's not gotten getting raises and bonuses. So his standard of living, he's living paycheck to paycheck. But now he's like, wait a second, I got all this equity, I'm rich, grabs the equity, and right now they're about 8, 9% to grab equity from your house, from a HELOC. So, but put that on, on the side because that's nothing compared to the 20, 25%. Joe Schmo's debt is costing him his credit cards. So he takes the 200 grand from his home equity line, he pays off his credit cards. So he's got this temporary relief now. So now the credit cards that he used to pay a bunch of money out are no longer bills that he has to pay monthly. But here's what happens. And then I'm going to say the one step that they're missing, they get into that habit of now they've got free money, so they go out for dinner once, then twice, then they add this, then they add that, and these, these, these things which once were luxuries but now are just necessities in their life. And that's actually like a, a thing, like once a luxury, now a necessity. So now these things are just normal. But all that money that they freed up from those credit cards being paid off, all that is now spent on these extra things. And now they're feeling pinched again. But now they've got that HELOC debt that they haven't paid, which is a drag of 8 to 9% interest, and their house is at jeopardy. The one step that they missed. And Justin, you know, this is what I teach every single day, is what we call recycle and recapture. It's the infinite banking concepts. Okay? It's just the process. When that person, Joe Schmo, paid off those credit cards, what they should have done is build a habit. And this takes a habit. It takes some time and it takes some work, but once you start it, it becomes the norm. Once they paid those credit cards off, what they should have done is set up a bill pay or like I always like to say, just change the name on the check. Instead of writing the check to Visa like you once did, for the exact same amount, change the name on the check and write the check to yourself, but deposit it into a bank account that is not your normal bank account. Because your normal bank account's like a black hole. Everything that goes in it by the end of the month is zeroed out. So you create a segregated bank account in a bank that you don't go to often, and you don't have debit cards and, hell, don't even get checks. And you put that credit card payment that you once made to the credit card into this bank account. You recycle and recapture the money you used to give away. Now, if you did that for six months, that would become habit. You actually, I would argue it would take three months to build habit. If you did that, that money, remember, you're not missing the money because it used to be leaving your family to go to the credit card. Now you're just putting it into a bank account. And if you could build the habit to not spend that in three months, you would take the chunk there and dump it down on your heloc. Because now you've. Now you've made real progress because you paid off 20% credit cards with 8 or 9% debt. But now you stockpile the money by recycling and recapturing what you used to give away into an account that you weren't spending. But now every three months, you take the chunk, the prince, the balance that's in there, and you pay it down on your HELOC. Now, because HELOCs are simple interest, that's real progress. Now you really do have extra income in your household, and you have extra wealth because you paid down the equity that you borrowed. So if you kept doing that every three months, eventually your HELOC would be paid down, and eventually you'd have real money. But that real money, you have built a habit of keeping it because you're used to it going into that segregated account. So now all of a sudden, you could start building wealth. You can start closing the gap on the paycheck to paycheck and start making meaningful progress in having actual, tangible financial results. That's it. It's so simple. Because you're not changing your cash flow. You're not working harder or longer, and you're not taking on any risk. You're changing, like you said, the habit of how you treat money. That's the biggest problem with Americans right now is the habitual way that we have come to think money works when it is not the way it works.
- [16:02]
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- [16:32]
Justin
Yeah. You know the, the idea of getting lower debt to pay off higher debt, right? And we're talking about interest. So you're, you're getting 8 or 9%, maybe 10, call it 10, but relative to 24, whatever credit cards charge these days. To me, it's just a pretty simple decision. What you're suggesting, and I want the clarity here, is let's say your credit cards cost you six grand a month. Let's say you go get new debt, call it a HELOC, call it anything. And that debt is at 10%. If you can pay off your credit cards at 24 and you were able to afford your six grand a month, you were just cash poor every month like you had nothing left over then. What Chris is suggesting is your new loan at 10% might only be 3, 500amonth. So you can afford the 3, 500 because you could also afford the six grand. Well, Chris is suggesting you take the difference of $2500 and instead of just going and now going out to two more dinners or buying the thing because now it's left in your bank account, you actually invest it into an insurance policy. This is what Chris does. And I would tell all of you to go follow Chris all over social media, YouTube, etc. In that $2,500 goes into insurance policy, in that insurance policy will grow over time, but then you actually can take that growth of your insurance policy. You're still cutting the $6,000. You're just repositioning where you're cutting it. And you take that $2,500 and you pay down. Let's just say it was the 10% HELOC because it's simple interest. You're actually able to pay that down a whole lot faster than you'll ever be able to pay the credit cards. You're still cash poor at the end of the month. You don't have extra cash. You're not putting in savings, you're just reallocating where the money is going in a way that if what I think is brilliant, about HELOCs. I'm a big HELOC proponent, by the way. You and I are investors, right? You could flip money. I can flip money. HELOCs, give us a resource. I have a million dollars stuck in my home and I think I can only get a $500,000 HELOC, but I know how to flip that, right? So I like heloc. So that could be an answer for some of you. As long as you have the habit that you put it into the insurance, you take it out of the insurance, you can pay down the heloc, you put it into the insurance every month, you take it out of the insurance, you put it on the heloc. And if you just do this forever, your HELOC will be gone. And now you'll have this massive life insurance policy that has incredible cash value. But it takes the habit to do this. This is where, whether it's Andy Frisella or Name the motivational guru, this is where the rubber meets the road. Can you actually have fortitude and stick to the thing that you need to be doing or not? That's going to be the ultimate question.
- [19:12]
Chris Noggle
Yeah. And let me quantify just a few things because thank you for going through that. That's exactly it. The policy that we're talking about, the specially designed and engineered whole life policy. A lot of you, when you heard Justin say that, you're probably thinking, why in the would I ever put that extra money, that 2500, into this stupid whole life policy? You'd be thinking that, right? Well, here's why. Well, number one, all the wealthy families throughout history have done this exact thing. So I'm not the one telling you this is smart. Look at history. Look at the Morgan's, who are bankers. The Stanleys, who were bankers, the Rothschilds, the Rockefellers, you both know them, some of the wealthiest families in history. And you can go straight through time and you can see that they've all done the same thing. But here's why. When the money goes into the insurance policy, it is earning, compounding interest, okay? When the money goes into a bank, right now you could argue, well, my money in the bank account's earning 3% compound interest as well. Yes, but when you take the money out of the bank account to pay down the heloc, that money stops working for you, okay? When it goes into the policy, it does not stop working for you when you take the money out to pay down the heloc, because you're earning uninterrupted, compounding interest. Let me give you one layer deeper when you take the money from the insurance policy, not taking your money, the insurance company is lending you money from their general account, essentially lending you part of your debt benefit while you're living. Therefore your cash value, your savings, if you will, never leaves the account. Which means now your money continues to earn for you, continues to compound for you while you take the money out and you use it to pay down the HELOC to which you use the HELOC in the first place to make a spread, but now you're making an even bigger, bigger spread because as the HELOC gets paid down, the simple interest calculation on what you're using is actually lower because you're paying interest, same rate, 10% but on a lower declining balance every however much you use it every three months. I, I had made the mention all the while that policy where you use the money from that you, you just changed where the money went, never stopped earning interest and dividends. So you're compounding there. So you're making money twice on the same dollar and staking instead of with the bank account. You're making money once and then you're, then, then every time you take the money out of the bank account, you're starting over again because now you took the money out and you paid the HELOC down, you won, but you didn't really win because your money stopped working. Then you got to build it back up and you start feeling good, you got the balance, it's earning interest, then you take it out to pay the HELOC down. You feel, you feel defeated. You see the one thing that, what Justin mentioned, what I'm explaining here and what I do every day for thousands of people is compounding interest is the differentiator. And we could layer in a couple more things like the policies, tax free growth. But let's just keep it simple. Compounding interest. Albert Einstein, we all know the name. He was a mathematician, one of the smartest men ever to live, especially when it came to math. He was very, very much an advocate of compound interest. He called it the eighth wonder of the world. He said it was the most powerful thing in the universe. So I would argue most powerful thing in the financial universe. But if he said that, then why is it that you're not tapping into it? That would be the question I'd ask to your audience.
- [22:22]
Justin
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- [23:49]
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- [24:19]
Justin
So listen, in the personal space of finances, people are maxing out credit cards and you know, living a lifestyle that they can't necessarily afford given the fact that they don't have a great ability to create more income. So you know, my, my accountant always tells me or any of their his clients is listen, if you have an opportunity to create more income, taking on some level of debt isn't a terrible thing, right? You just now need to go have the opportunity to be able to earn more, to be able to pay that stuff off. With the challenge in the, in the personal space of personal finances, most people, the vast majority of most people have nine to five jobs. They have a stuck income. They very rarely have the opportunity to make more. But why I say that is I'm going to transition it into the real estate sector of big business developers, right? And I'm going to keep some of the names out of this Because I have connections to some of them. But what happens in the personal financial space regarding real estate and having a lot of equity in the run up from 20, let's call it 2010 to 2021, and then the massive run up from 2021 to 2022 4, let's call it, that caught everyone. So while in the personal financial sector we all can say, hey, we have all this equity in a house. Like, I literally doubled my house's value in less than three years, Chris, here in Miami in less than. That's like insane. It's not even like now I'm in Miami, I'm the right area, etc. But the homebuilders did the same thing. The challenge with all of this is the financial space for the personal side now can't afford the opportunities that are presented us in housing, right, because of their debt, because of their dti, because the income ratio. But the lending was way cheaper for these developers then. And they built a product based around where the market was heading. The challenge we have is it takes time for them to build the product. So when the product is ready to sell in the financial world has changed shape and people are hurting more financially. Maybe they're not, you know, financially getting crushed, but even this concept we're talking about in credit card debt and debt to income ratio and equity, which they can't really do much with, being able to sell these assets as a builder is becoming incredibly difficult. I've had several conversations over the last 45 to 60 days with actual builders and I'll keep their names out of it because I think I'm going to have a nice opportunity for myself. But they're feeling it, right? This isn't, this isn't siloed to personal financials, right? This is big business. This is builders, this is real estate as a whole. Took a trajectory for the better part of 15 years that isn't sustainable today. And now we all have to deal with it.
- [27:09]
Chris Noggle
Dude, speaking my language, and it's interesting and I would call it, you know, the masses, the developers and all these, they go off of data, but they chase the wrong data. So what you just mentioned is spot on. These developers saw a huge opportunity and that opportunity is there's a massive shortage of housing in this country and there still is today, a massive shortage. So if any of you listening to that, heard that there's a massive shortage, you'd be like, ooh, opportunity, right? I'm going to go out and I'm going to provide housing to fill this massive Shortage. Now after Covid, remember I mentioned savings were going up and people were feeling flushed with money. The government printed five point something trillion dollars which we can't even fathom how much money that is. So like everything was just overflowing with opportunity and money. So they, they then started their project. So we'll call that four years ago. It's a long process, the permitting, the, you know, getting all the infrastructure in place and going, you know, going vertical on your projects and getting them to the market. So let's just say a project started in 2021, hits market 2023, 2024. Right. That for some, that's probably realistic. A lot has changed from 2021 till 2024. A ton has changed. We just talked about some of the big stresses right now. Debt. People are burdened to debt. They're living paycheck to paycheck. The economy is slowing, unemployment numbers, well, they're not changing much, but they are starting to tip the wrong direction. So you're starting to see these cracks in the foundation. But yet all this housing was built to solve a problem which was there's a shortage. But they never ever looked at where the real need was or they did and they just ignored it because it wasn't sexy. So the real need this entire time in this housing shortage was affordable housing. You've heard this talked about over and over and over again. But what did developers build, Justin? They didn't build affordable housing. They built luxury apartment complexes, luxury mixed use retail. And that why? Well, because that was the appetite the banks wanted and that looked good on a pro forma and they could make their numbers look good and they had data to support that, but it wasn't sustainable data. So what you're seeing now, and I'm just going to pick on your state of Florida because it's one of the worst right now for what's going on. You are seeing pullback in prices, especially in multifamily. I'd argue that multifamily has been in somewhat of a recessionary state for the last three years because of what we're talking about here. They missed the mark. The syndicators and all these developers missed the mark. They built luxury, they bought luxury, they overpaid for all this stuff because they thought the parade was never going to end. Well now in Florida, and I just did a whole YouTube video on this, 17% vacancy rates. So you're in real estate and your audience knows real estate. But like if you ran a pro forma with a 5% vacancy, but now you're realizing double digit vacancies. What happens to you as the real estate owner?
- [30:10]
Justin
We are dropping. I mean the reality is, is you and I talked about this previously. You still got to cover the bills, right? You still got to pay the bank, you still got to pay the taxes in, in listen the state of Florida. I'm a resident. My property taxes here are insane, right? Yeah. I have no income tax, bro. Florida gets you. They're, they're going to find a way to get their money, right? So whether it's insurance, you guys got.
- [30:33]
Chris Noggle
So many toll roads.
- [30:34]
Justin
Oh my God. Toll roads. So property taxes is one way. But you know the insurance component of this, when, When I have 60% or what you just said, what do you say? 40% of my portfolio goes vacant or whatever number you just used.
- [30:49]
Chris Noggle
17 in Florida.
- [30:50]
Justin
17. I still have insurance on those properties which is insanely high.
- [30:54]
Chris Noggle
And your insurance has probably gone up 17 in the last year.
- [30:57]
Justin
Minimum, right, Minimum. And so that's why, I mean I'll make an argument which I don't want to change the subject too much like the single family asset portfolio game. Until you get to scale, it's just not sexy. It is just pure work. Putting out fires, answering challenges, finding solutions. Because you don't have the economies of scale. Fine, you go and get 200 doors, you have economies of scale, you can, you can get through most anything. But you know our world right now in the financial, the real estate space is very, very interesting because what you said everyone had. I bought four apartments in 2024 for what you're saying. I was trying to look around the corner. Now I've had my own challenges with that. But the end result is likely going to be really, really good. Right. And it's because it's going to be affordable housing that the city itself needs. The city is giving like 25% rent increases for people who are bringing new affordable housing to market. Like there are states and cities and counties that are leaning into this in a big way because the builders, they built a level properties that just doesn't fit the mark because their cost to build became so expensive because of COVID the lending no longer was as good for them. They have to get out of their loans, they have certain level of loans, construction loans, etc. The loans these days are nowhere like they were in 2022. Right. And now they built this product that doesn't fit the mark for affordable housing. So an investor like me doesn't want to go buy 20 doors from them, which conceptually sounds Great. But I can't afford to buy that house because the rents won't give me the return I need to buy that house. And it's this cyclical again, this whole cycle of like the builders in the real estate side is just as impacted as is the person who maybe got a little egregious with their credit cards and now has to find solutions.
- [32:54]
Chris Noggle
Yep.
- [32:55]
Justin
And good.
- [32:56]
Chris Noggle
It's that, you know, we've all seen the scale, Right. You've got demand in price. So what has to happen is the prices, which right now are record, you know, record high price of housing, you know, the price of rent, that has to level to what the demand can afford. So you are, no matter how much you believe this or not, you are going to see a softening. You're going to see a softening in rents which are already seeing, but you're not seeing it directly in price. You're seeing these, these real estate owners that built these luxuries giving 12 months free. But literally, if you pencil that out, that's like a reduction in rent quite significant because you're, you're literally giving two months of free rent to entice people to come in and rent your space, which you don't even know whether or not they're going to be able to afford long term or not. But that's a whole nother story.
- [33:42]
Justin
Yep.
- [33:42]
Chris Noggle
You're going to have this leveling. You're already seeing it in the Sunbelt states. You're seeing pricing of the properties come off of their highs. Not seeing that nationwide, but you're seeing that in some of the highly appreciated areas. And you are definitely seeing softening of rents, which is going to hit the bottom line for these developers. We just haven't seen it yet. You're only starting to see the cracks in the foundation, but these cracks are going to get bigger and it's going to happen faster. Where now affordable housing is still the massive need and without some type of subsidy, it's just not profitable. It's just not profitable. Which is why states like Florida, Texas and other states are starting to come up with huge subsidies to build affordable housing. But again, now we restart that cycle. You start today, 2025, to start the process of building affordable housing.
- [34:28]
Justin
Right.
- [34:29]
Chris Noggle
You're not, you're not ground up, ready to rent for a couple of years. How much does the economy shift now? I would say you nail it. That's my outlook. If you built affordable housing today, you're going to knock it out of the park in the future because you're going to, you're going to solve the problem at the perfect time. But what you're going to see is as that starts to become the commonplace, as pricing comes down, as, as the economy softens, you start seeing all the pricing come down. Now it makes sense to build affordable housing. All the money flows to affordable housing. Now, you overbuild affordable housing. We, we are going to continuously be in this cyclical pattern of being behind the curve, and there's really no answer to that. It's just right now the problem is most real estate developers missed the mark and they're going to pay dearly for that.
- [35:14]
Justin
Yeah. You know, and funny enough, I was actually just talking to a friend of mine that is in a totally different sector, but he really believes he's going to work his tail off for the next two and a half years while Trump's in office, and he's going to try to have a liquidity event because he's just going to be so uncertain of where the financial world will be after Trump. This isn't a. Whether you like Trump or not, you just know where he stands, right? Like, that's the reality. He is blatantly clear with you where he is going to stand in the financial sector and in the business sector. And, you know, I think for a lot of people, and this is not financial advice, I'm not a licensed financial advisor, but I think making a play to reduce as much debt as you possibly can and have some level of liquidity event here before Trump is up, I think benefits everybody. I think it benefits builders. I think builders should be taking massive discounts right now, moving units, getting out of, of what they were in for two or three years. I think people should be looking at, you know, how do I reduce my debt, how do I gain equity, how do I create an opportunity for liquidity event before Trump's out of office? Because I believe, just like you, you'll probably have the highest numbers that you're likely going to get in a very short amount of time. Just because I'm uncertain of, of who's coming after Trump and what policies they're going to put in place. You just know what Trump's about. Trump's about business. Trump's about money. Trump's about making money, keeping money. Right. Supporting businesses. The big, beautiful bill passed you and I love that. Right. There's so many components to that that we don't even have time in this episode. But it will be interesting to see what happens here with, with affordable housing, because we know that that is the biggest issue, I don't want to say biggest issue, but like, there's just not enough housing for people right now, period, end of story, affordable or not. And so it just has to become more affordable, period.
- [37:14]
Chris Noggle
One way or the other, it's either going to be a forced affordability kind of move or the market's going to shift in time to satisfy that need. It's going to happen one way or the other. Like you mentioned the other thing too, and I know we don't have time to get into it, but the big beautiful bill, which came with much controversy, a lot of extra debt on the balance sheet that nobody wants because obviously and Trump did run on, you know, paying, paying the deficit down. I just want to hit on two, two things. Number one, everybody that says that the big beautiful bill is just for the wealthy, you clearly can't even read because if you read the bill and you understand it, most of the things that Justin and I would want, we were income phased out of, like, of course I want to write the interest off on my cars. I especially want to do that because I, I, I run a private banking system. I pay all the interest back to myself. And if I could write that off, I'd be like, yes, it'd feel like I died and gone to heaven. But that isn't the case. We're income phased out on most of the really cool stuff that, but it's great because it benefits the middle class and the lower income. However, there are several things that do benefit Justin, myself and real estate investors. And like the 179 bonus depreciation going back to 100%, that will be a massive stimulus for business and especially real estate developers or real estate investors in the coming years because it will literally put money right on the bottom line because we get to take depreciation on all up front at 100%. It's massive. You're going to see that help the oil industry, you're going to see that help the real estate industry. You're going to see that help most businesses in a huge way, which, like you mentioned, is going to pump a ton of money into industry, a ton of money into businesses, balance sheets. But the problem is they're going to have to get better people as a whole. I don't care if you're in business or not, you are going to have to get better at keeping more of what you make because if you keep living, you know, up to this level and paycheck to paycheck, when this whole thing does burst and it will. You're going to be left really hurting. You are going to enter a world of hurt that, you know, you. You've probably never felt in your lifetime, and no one in our generation has. It's coming, folks. But the people that start living simpler, that stop spending every penny, that start keeping more of what they make and that learn how to make their money work for them, they are going to see opportunities that I don't think you and I have ever seen in our 40 some years on this Earth. The opportunities are going to be so am amazing. But the problem is the people that can take advantage of those opportunities are going to be so few and far because too many people are living in a world that they think nothing's going to stop. It's going to keep going up and up and up. And that is not the way the economy and the markets work. Not in the slightest. And I just want to finish with this one thing. I think this sums up the biggest problem in this country. And it's not me saying it. Will Rogers said this. He said the biggest problem in America is not what people don't know. Will Rogers said the biggest problem in America is what people think that they know. That just ain't so. What that means is people have gotten so comfortable with everything going up with their markets, going up with their 401ks, going up with their home values going up, that they have literally forgotten that there is another side that can happen. And that will happen. And unless you're prepared for it, you're not going to take advantage of it. The opportunities will come to you, just like they come to me and Justin and everybody else. They will come to you, but your door will be closed. And I'll recite, you know, the sermon from the Mount. Knock, and the door shall be open. Seek and you shall find. Ask and you shall receive. If you remember those. Those only come to the person who's willing to receive, not the person who thinks they know what they don't know. And that's, I think, some of the best advice I can give anyone.
- [40:52]
Justin
Yeah, I agree. And I'm just going to lean into that. Give yourself enough Runway to receive the gift, whatever that gift is. Right. Is if you just react and make decisions because you think, you know, to Chris's point, and you actually aren't open to saying, okay, maybe this is or isn't the right thing. You're not giving yourself enough Runway, and you're shutting that door. And if you shut the door, then you're not going to be able to receive the gift, whether it becomes, you know, the, the, the, you know, big beautiful bill or anything else. Being able to understand that you need to give yourself enough Runway to receive that is going to be a really big issue for a lot of people because I think a lot of people are going to make irrational decisions because they think they know what they know and it just ain't so. As you just said, Love it, man.
- [41:38]
Chris Noggle
I love it.
- [41:39]
Justin
Guys and gals, if you like what we are talking about, you like talking about finances, you like talking about real estate, you like talking about insurance, you like talking about getting rich, getting wealthy and actually having financial freedom. Make sure you're following Chris Noggle on all platforms. Be your own bank is his business. Chris Noggle on Instagram and YouTube. He's a very close friend of mine. He's a business partner of mine and someone I go to advice all the time for financial advice. And so I appreciate you coming on.
- [42:07]
Chris Noggle
Hey, thanks for having me, man. Appreciate it.
- [42:09]
Justin
All right, guys, if this was helpful or if you think a couple people need to know. Chris Naugle, share this with at least two of your friends. I'd greatly appreciate it. We'll see you on the next episode. This is a vacation with Chase Sapphire Reserve. The butler, the spa. This is the edit a collection of handpicked luxury hotels and a $500 Edit Credit Chase Sapphire Reserve the most rewarding card. Learn more@chase.com Sapphire Reserve cards issued by.
- [42:30]
Chris Noggle
JP Morgan, Chase bank and a member.
- [42:31]
Sponsor Voice
FDIC subject to credit approval.
- [42:33]
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