WARNING: Another 2008 Housing Crash Or WORSE? (Housing Bubble Explained) | Jaspreet Singh

we assume that the reason why we're not successful is because we don't have the right tool set when in reality for most people is we don't have the right mindset it's not a tool-side issue it's a mindset issue that so many people have where if you have the right mindset you'll realize that the tool side is right in front of you yeah and you just gotta i think you gotta have a dream the school of greatness yeah please welcome so do you think there will be another kind of housing crash like there was in 2008 what do you think is happening right now where do you think it's going to be heading in the next year i want to talk about the housing stuff for a little bit with you so that's a very good question and the reason why is because there's a lot of scary stuff happening out there inflation is still near record highs what's that right now uh our last report was eight point five percent do we think it's going to keep going up well let's stay we'll get into inflation a little bit uh we have our gdp our economy which is slowing down we've seen two quarters of economic slow down our market stock market is way off its highs now real estate is starting to slow down interest rates are starting to go up and this has a lot of people wondering now what's going to happen to the housing market like you said are we going to see a repeat of 2008 and the reason why that question is asked so much is because 2008 has really left a huge impact on so many people's lives because you have a lot of people that are still paying the price of the 2008 aftermath today today really yeah because a lot of people took out loans and they had to you know they had to give up their home they bought all these homes right they had the foreclose on them the banks losing your home is not an easy thing to do and that i mean it's traumatic for a lot of people and that's something that's very difficult it stays on your credit score for seven years so this is what people are really worried about is something like that going to happen again and the first thing that i want to say because there's a lot of headlines a lot of news stuff in there that this is not a repeat of 2008. so let's understand that it's not it's because it's not a housing bubble crisis like it was then yes it is not the same as 2008 because 2008 was a financial crisis started by the real estate market right and it's funny because i just watched the big short you a few weeks ago again i love that beautiful movie and to see like the analysis of people forecasting and no one believing because they're like oh the banks are going to like bail it out but then right it's crazy so 2008 was the real estate market that trickled down to the rest of the economy this is more of an economic issue that could then trickle down into real estate so it's very different interesting which is why that was a real estate problem this is an economics problem yeah the economy problem which could affect real estate in a big way so you know i think your readers your viewers already know this but i'd like to go backwards to understand where we're going forward yes look at the history yeah and see where the future is history doesn't repeat itself but it does rhyme so i like that you said that last time history doesn't repeat itself but it rhymes so in 2008 or before 2008 what happened well there was four major factors that led to the 2008 housing bubble bursting okay the first was something called ninja loans no income no job no asset loans so you don't got an income you don't got a job you don't have any investments you walk into the bank and you say hey i want to buy this 200 000 home can you help me and they'll say sure you don't need a job all homes keep going up so we will give you the money then the next thing you say is but i don't have money for a 20 down payment give me 10 well don't they said zero percent in your first home it was like a zero percent zero percent mortgages so it was a huge boom of zero percent mortgages but even beyond that there was this push for actually 110 ltv loans meaning if you wanted to buy rough numbers a hundred thousand dollar home not only would the bank give you the hundred thousand dollars so you need zero down they'd also cover your closing costs it also give you some movement costs and then give you a free tv so you can move in because home prices never go down see the banks are in the business of making money and their mind was the more money we lend out the bigger commissions we get and if home prices keep going up well we'll just give you a little bit extra cash and then a couple years down home prices will go up and we'll be okay so now you have no income no job no asset loans ninja loans zero percent down but what happens then if you don't have a good credit score well that was where we had this huge subprime lending issue where banks created programs to help people who had bad credit scores sub-prime credit scores that you can now qualify to get a home so your subprime your no income loans no income no job no asset loans with zero percent down but then you say that's a big monthly payment i don't want to pay whatever 1500 a month and that was the fourth factor which was adjustable rate mortgages there was a big push for arms adjustable rate mortgages which meant that let's just say typically that this home would cost fifteen hundred dollars a month for you to purchase you might not be able to afford that or maybe you don't want to pay that the bank might say well how about we give you a low teaser rate for the first few years so you only have to pay 900 a month so you get a low interest rate for the first few years so you can afford the house you can afford the home and now once you're in the home it's your problem it's no longer the banker's problem right because the mortgage agent they just get paid as soon as you sign the paperwork and then they walk away so now you get this low teaser rate and there's two aspects to this because now you who was buying the home you don't have the financial education because it's a tool without the financial education where now you don't understand how an adjustable rate mortgage works you don't understand that in a few years mortgage is doubling it's going to readjust and so if mortgage rates go up or even if they don't go up and they stay the same your payments are going to increase and so all these things happen together and everybody was making a ton of money homeowners were making money because now you bought a home for 200 000 and now it's worth 250 000 you feel great bankers are making money because they're lending out loans they're handing out loans like crazy wall street is making money because then the extra factor was in wall street would take these loans chop them up package them up into their own investments and sell them off and yes oh you know you saw that they're talking about packaging all these things the b loans making the main loans or whatever yeah exactly and then the insurance companies got involved so it just kept getting bigger and bigger and bigger so everybody's making a ton of money off of the real estate market it's no big deal and then comes the year 2005. 2005 came this was the first year that there was concerns about the housing market ben bernanke who was then the chairman of the federal reserve bank came out openly and said what real estate bubble there is no real estate bubble to burst meaning how can there be a real estate bubble bursting because there is no real estate bubble that was what he said in 2005. well 2006 we started to see home prices start to go down a little bit more and now people are starting to get underwater on their homes so the pitch was if you took this adjustable rate mortgage well if in a few years you can't afford the payments no big deal you could just sell the home walk away with some cash or you can refinance and we'll try to give you on something else that way you can manage your payments but the caveat which many people did not understand or they didn't know was that it requires your home to be worth more in the future or at least the same that way you can refinance so if you bought a home for 200 000 then comes a few years later and you're trying to refinance and now you owe 190 000 but it's only worth 180 000 you go to the bank and you say hey banker i can't afford the payments they readjusted you told me that i can refinance or sell what do you think i should do well then they say oh man so i just pulled up the numbers your home is not going to sell for more than 180 000 so we're not going to refinance you because you're underwater so you're going to have to figure something out on your own now you can't sell it either because if you wanted to sell your home for 180 000 and you owe 190 000 you need to bring 10 000 to the closing table which most people in this situation did not have so what are you left with you can walk away or get foreclosed on so this then became a much bigger issue because then we started to see some foreclosures and this built a huge house of cards which people didn't realize because now we're just talking about the housing market but this then became an everything issue because wall street was then gambling on the housing market mortgage-backed securities there was all these things that we were talking about right now wall street was double dipping creating all these new investments based off of people's mortgages creating all these i mean i can't emphasize enough how many different investment scenarios and things that they created and so now when the base layer which is the housing market started to collapse the whole house of cards started to fall down and i'm going to say this now because i think we're going to talk about this later on but this is where you have to be financially educated and be aware because sometimes the media and people in power will lie to you in your face to keep you calm because um if i remember the date correctly i believe it was may 17 2007 big day because ben bernanke the then chairman of the federal reserve bank who remember in 2005 said three years prior two years prior said there's no housing bubble that could burst came out and said that the subprime housing issue will not trickle down to any other parts of the economy it is contained to the housing market so you don't need to worry about the economy he said that openly in 2007 then a year later then year later the whole thing imploded the whole house of cards came crumbling down so now that was what caused 2008 it was a real estate issue then trickled down into the rest of the economy today our real estate market is very different people have equity in their homes very few people are buying homes with zero percent down nothing like 2008 adjustable rate mortgages are not as popular although they are growing in popularity now because mortgage rates are going up adjustable rate mortgages are making a big comeback uh but they're not out there to the extent that they were before 2008. we don't have the same subprime lending and so it's a very different housing market people have equity in their homes people have skin in the game and many people have a 30-year fixed rate mortgage meaning if interest rates go up and you have a 30-year fixed-rate mortgage it doesn't affect you as long as you still have a job because your job can continue playing paying off the mortgage so different situation however this is where now we have to look at the economic issues because if you lose your job because the economy is going down now you can't pay a mortgage and if that happens on a broad scale where people don't have the ability to pay their mortgages now you can see how that would then trickle down into the housing market so that is the concern and this is where you have to dissect what's actually happening in the economy now of course nobody can predict what's going to happen and i do not recommend anybody trying to trade what could potentially happen be an investor look for opportunities be a long-term investor if you find a good opportunity buy it and hold for the long term don't try to trade or try to predict what's going to happen in the market what i want to talk about is what is possible that way you can make sounder and better decisions for you and your money what do you think is the worst case scenario and the best case scenario so let's go right into the housing market over the next couple years so let's i think if we go into the economy if i answer that question the economy it will by default answer the question in the housing market so in the economy it's a weird situation where our economy is slowing down because of high inflation so 2020 2021 the federal reserve bank pump all the money into the economy we print a lot of money this devalues our dollar causing the price of things to go up so now your rent is more expensive your groceries are more expensive your gas is more expensive airfare is more expensive why do they do that knowing the price everything's going to go up in price see you said knowing they will go up in price right in 2020 they said the opposite when they were printing trillions of dollars through things like the ppp lending program through the stimulus program the concern was not inflation it was actually deflation uh because in 2020 when the economy shut down the concern was the prices of things are going to drop we don't want that to happen because no one's spending enough is that why or no one was spending and so deflation is a very bad thing for the government it's great for people right because now you're saving something valuable if you make 50 grand a year and you have deflation your 50 grand can buy you a whole lot more because the price of things dropped but it's bad for the government because today our government has something like 31 trillion dollars with the national debt and so if deflation were to happen that means their debt their 31 or so trillion dollars is now more expensive and so the payments become more expensive so we're paying for their mistakes yes the american people are paying then for the debts of the government yes the united states government does not make money they generate revenue by taxing you right when you work hard and they print money they pay money and then you pay the price for that pay the price of inflation so the government there's no such thing as free money the most expensive kind of money is free money [Music] because now look at the cost now everybody pays through inflation so free money is the most expensive kind of money and so in 2020 when the concern was deflation they started printing money through stimulus programs through bailout programs through money printing programs to fund out you know whatever they wanted to do that was when the money printer opened up and you said they knew inflation was going to happen no they did not how can they not predict that though knowing that you're going to give all this free money out isn't inflatable let me let me rephrase that either they willingly lied to the american people or they're just completely ignorant but these are some of the smartest people in the world i mean they're ivy league economic school graduates right i mean these are very supposedly smart people who said that this was going to happen now what's interesting is a lot of people predicted this like i talked about this very openly on youtube i said look this is what's going to happen 2021 came inflation is transitory was the like the phrase where inflation started to go up and i kept saying hey don't expect it to be transitory because the federal reserve bank doesn't have some fairy dust to make it magically come down right how are they going to do that they're still printing money inflation is going to get worse and when inflation hit er around 6 in august of 2021 it that was slightly lower than where it was previously and that was when they said inflation has peaked we're all good now but now it's on its way down now it's at it's at eight and a half percent and so it was it was uh quite i mean it was a long process but this we have to understand that either they're lying or they're completely ignorant and now we don't want to assume i mean we shouldn't want to assume that they're lying to you and that's that would create a lot of chaos they're ignorant so again we want to be financially educated why is it that in to actually let me mention this because this is interesting in 2007 when ben bernanke said the subprime market will not affect any other part of the economy did he not know any better i mean i think most people who were aware financially aware that the time could have looked at a spreadsheet and said hey this is a big issue ben bernanke actually spoke about that after he was done being a federal reserve what did he say and he said that i was asked not to say anything because i could not incite panic i didn't want to incite fear so that's what he said this is what he said so he essentially lied essentially because they don't want to create panic wow now keep spending the way you're spending keep living your lives don't worry everything's gonna be okay that's i mean like look don't save a little bit more don't you know they're just like i just keep i don't you know you got to be careful because i'm not trying to be a conspiracy theorist but like look the federal reserve bank are made up of highly educated people to think that money printing printing trillions and trillions and trillions of dollars i mean on the low end with the federal reserve bank of government spending on the extreme low end at six trillion dollars to think that that's not going to create lasting inflation is insane and so either someone's lying or they're completely ignorant as to the way that money works yeah and so you know these are the things that i've been trying to talk about on youtube to get people educated but this is where now the question is what's next what's so what's the worst case scenario so the worst case scenario i mean this is the worst worst worst case scenario is you face some sort of uh currency crisis hyperinflation i mean that that is not rare very likely yeah but let's focus in on now what is the worst case kind of likely possible in terms of the economy so the inflation problem is still very high and this high inflation is contributing to a slowing economy now the federal reserve bank is working to fight inflation they're doing that through raising interest rates and they're doing something called quantitative tightening where they are pretty much giving back some of the money that they printed over the last few years so they bought up a whole bunch of bonds mortgage-backed securities they bought up a bunch of treasury bonds as a way to stimulate the economy and so the federal reserve bank has built up this balance sheet of almost nine trillion dollars of assets so the federal reserve bank doesn't have cash like they don't have a pile of cash anywhere they had to print nine trillion dollars to buy up these assets over the last number of years and now what they're doing is they're finally starting to sell them off now they're not selling them off very quickly they are selling them off a little bit slower than what they expected but they are starting to sell them off now to help free up some of this inflation the second thing that they're doing is raising interest rates because when you raise interest rates it makes borrowing money less attractive which creates less inflation to help cool down the economy like the federal reserve bank wants a stock market crash really bank wants real estate prices to go down has the stock market crashed yet fully well it depends what you mean by crash so if we go just by now it's funny i'm going to say technical definitions because nowadays technical definition it seems like they can't change yeah it don't matter but uh traditionally the definition of a quote-unquote crash would be something going into a bear market meaning that the stock market has fallen 20 off of their highs we saw that happen and then we have also seen stock market rise since then so the stock market is very volatile it has gone down and the federal reserve bank wants stock prices to go down they want real estate prices to go down and they also want unemployment to go up they want some people to lose their jobs why they want wages to go down and this is going to sound very bad but they've also made this very public so the reason why they want these things to go down is because it's a way to cool down the economy that's why they're raising interest rates so when the federal reserve bank raises interest rates there's two things that they're looking at and when they're raising interest rates they're doing that on the housing market or whether they're raising so they're raising something called the federal funds rate which is overnight lending so essentially think of it as when you go and get a mortgage from the bank you're buying something from the store you're getting the retail price the store in this case the bank gets a wholesale price they get a discounted price right they're buying it in bulk so the banks can borrow money at a cheaper rate and then they lend it out to you so when banks have to pay a higher rate then they're going to have to charge you a higher rate just like when stores have to pay a higher rate from their wholesaler manufacturer they have to pay it more down to you so when you buy from the bank when you get a loan from the bank it is the retail price so the federal reserve bank does not affect how do you get the wholesale price that's the federal reserve bank so this is now the federal reserve federal funds rate that the federal reserve bank controls can an individual get it at wholesale that's what i'm trying to figure out no we cannot uh so we we get from the bank unless you are a bank you're not going to be able to do that right so the federal reserve bank gets to control these things and then they impact mortgage rates which then impact spending so when the federal reserve bank raises interest rates so when the federal reserve bank raises interest rates now you're going to have to pay a higher price to get a mortgage now that affects inflation which can also affect the housing market so the federal reserve bank is looking at two things when they're determining what to do with interest rates they're looking at inflation and then they're looking at the general economy when inflation is high that's more fuel for the federal reserve bank to continue raising interest rates to fight inflation but in order for that to happen there's a second factor that they look at they're looking at the economy they're looking at things like unemployment rates they're looking at the strength of the economy because if people have jobs well that means then we have a strong economy so it's ammunition that the federal reserve bank is okay to go and keep raising interest rates because if it was flipped where we have a super high unemployment rate people don't have jobs the economy is crashing you said the yeah the government wants that so the veterans are bank federal reserve they want people they want a lower unemployment rate sorry they want a higher unemployment rate meaning they want some people to lose their jobs and they want wages to come down because that will help cool down inflation and it's a very weird thing you're gonna go search it on google because they've said this because you're going to think jasper what the heck are you talking about no jerome powell has openly said this where the labor market is too tight it's too strong meaning too many people have jobs they want wages to cool down they've said this very openly where people are getting paid less they exactly they don't want wages to keep rising at this rate because they're worried about something called the wage price spiral i'll talk about that in just a second so they don't want wages to keep rising and on top of that they're looking at this economic data comparing it against inflation and that's going to help drive the decision about interest rates and so if wow people have jobs wages keep rising that means insurance are going to keep going up they're just going to keep going up and they're going to keep doing that until more people lose their jobs until we just stop going up and then that will hopefully bring down inflation because now let's talk about this wage price spiral very briefly because this was a big thing that happened in the 1970s into the early 1980s where you made money but you struggled to survive because inflation was high so now you went to your boss and you said hey boss i need more money and your boss said well i don't want to lose you so their boss paid you more even though you're not doing more you're not producing more value the boss is paying you more just because it's more expensive to survive so now you're getting paid more money so the business has to go earn more somehow the business has happened they're losing or they're losing margin right so now you have the money to go out and spend but then the business then has to start charging more money because higher costs yeah so now the price of things go up now the price of things go up you go back to your boss and say hey look that rage wasn't enough i need another raise now it starts create the spiral and this is what the federation bank wants to avoid by breaking that by saying we don't want wages to keep going up we want to break this inflation thing because we want to raise interest rates to stop this whole inflation mess and so one of the things they want to do is they want to see more people have lesser wages they want to see a little bit higher unemployment they want to see the stock market come down they want to see real estate prices cool down because that cools down inflation because that's their number one issue right now so i guess their people will i mean it'll eventually happen because if employees are like i need more and more money and the company's like we don't have any more money to give you they're eventually going to leave or they're not going to pay them and they have to shut the business something has to break something has to do with it shut down what's gonna bring that yeah so what's gonna break first is it gonna be the housing market or is it gonna be inflation is it gonna be the stock market is it gonna be inflation because the federal reserve bank is gonna keep jacking up interest rates based off of the economy and inflation until inflation comes down or until the economy goes up or so you see i'm saying like inflation's going to come down or the housing market's going to break where now it's the veterans are bank you have to look at their intentions i know i'm kind of scattering around here because there's so many different aspects here but the federal reserve bank today and this can change today says that their number one goal is to bring inflation down to two percent and it's like eight is it eight point some percent right now they want to bring it down to two percent by when they haven't said that they want it as soon as possible and how high do you think it could go what's the the likely worst case scenario of how high it could go so four drops let's let's talk about history right because in the early 1980s if you wanted to go and get a mortgage you were paying upwards of 18 to 19 to get a mortgage oh my gosh today we're talking about five and a half to six percent on a fixed rate 30. we're still the lowest we're still historically extremely low it's a lot of room to grow now if mortgage rates went from six percent to ten percent next month the housing market's going to crash right it's going to go down way down there's there's no alternative because no one's going to be able to afford those homes because home prices are so high and the reason why they're so high is because people have been able to borrow more money at a lower interest rate and so this is where now goes back to the question what is going to break first is it going to be inflation or is it going to be the housing market and you can replace housing market with stock market with crypto market with the economy it doesn't matter and this is the the dilemma that the federal reserve bank is facing and this is where their goal and what they say is we're going to have a quote unquote soft landing where we're going to raise interest rates gradually enough where we can cool down inflation without crashing the housing market without crashing the stock market without crazing too much of a problem like they do think the housing market is going to go down they do think that we need to see stock prices go down they do think that we need to see unemployment go up slightly that wage growth has to slow down however they don't think it's going to create a massive crash right so that is what they're saying now the question is what is going to actually happen right because this is where what rhymes history exactly history ryan so this is where you want to pay attention now obviously to what's happened in the past but what's actually going on and this is where now you can dive a little bit deeper into the data because now if you're looking at the housing market you're going to say okay interest rates look like they're going to keep going up unless the federal reserve bank completely does a 180 which is also possible right that's why it's so hard to predict and why i do not recommend trading because six months from now the federal reserve bank could say you know what inflation is no longer number one priority it is the slowing economy we're going to cut interest rates we're going to pump money into the economy you can see the stock market and real estate prices crash upwards i mean just think about that if tomorrow what would you do in the stock market in 2020 exactly they started printing it's like everyone started buying and well no real estate went through the roof especially in la if you think about if tomorrow mortgage rates went down to 2.5 percent what would happen everyone and their moms are going to want to buy their home they're going to say oh we're waiting now we're going to go take advantage of this opportunity we're not going to wait and now home prices will go well there's going to be no inventory or same issue right and so this is where you have to understand that you cannot try to perfectly time or predict what's going to happen but you can understand the different scenarios where the federal bank today says that they want to bring in interest rates up to bring inflation down what is going to help them make that decision well they're looking at inflation rates they're looking at the economy the economy meaning our economic slowdown and they're looking at unemployment rates so the fact that today unemployment rates are quote unquote extremely lower the lowest ever in 50 years and the fact that our economy is not slowing down that much based on that well they have more ammunition to keep raising interest rates well the more you raise interest rates what's going to happen the more the housing market gets hurt the more the stock market gets hurt the more the economy gets hurt it's very obvious how it works in the real estate market because now you have to pay more money to buy a home well it works the same way in the stock market and in business you're a business and you want to go borrow money to finance operations to finance growth to buy some new machinery you have to pay more money to do that well if you're gonna have to pay more money to do that you need bigger returns if you need bigger returns you need to be able to sell more stuff if you need to sell more stuff you need more people that have money the situation right now is people don't have that discretionary money because you're spending so much extra money on things like rent groceries yeah gas expenses have come down but it's still significantly higher right so this is the situation where the route and rent rent seems like it's going up too right rents are about 20 to 22 percent higher now than where they were a year ago housing costs around the usa around the united states on average right in some instances some certainties it's more some cities it's less and this is where you just have to i mean understand these are the options and this is where people start to panic they start to freak out and they assume that i need to make a rash decision today because oh my god this is going to happen they need their need to sell my home i need to buy a home i need to do this i need to do that because this and this might happen but something else could happen so you don't want to make rash decisions this is where you want to understand what's going on take a deep breath calm down and first understand that the real estate market if you're focusing on that moves much slower than the stock market moves slower it moves slower and that nothing happens overnight right so you want to be aware of what's happening and to give you an example of that when the 2008 crash happened stock prices collapsed in 2008 and they bottomed in 2009 so in 2009 the stock market started to go back up real estate prices really started to get hard in 2008 they continued to go down in 2009 it continued to go down to 2010 it continued to go down 2011 and then they bottomed in 2012. it took four years four years so real estate prices bottomed in 2012 and in 2012 the stock market started hitting new highs so the real estate market moves significantly slower than the stock market because you can't buy and sell a home the way you can buy and sell a stock takes more time you could buy a sell a stock in a second so people get emotional they get excited they get scared they panic whatever the emotion is you can do that in a second and that can cause massive swings up and down in the stock market versus the real estate market it could take months to sell a home maybe even a year and so it moves significantly slower and that's what you have to understand about the real estate market so we're starting to see it seems like prices are going down you know in the real estate market at least i'm seeing if i go on zillow in la because i'm just curious about the market you'll see homes that were up there for a few months and now they're cutting prices you see homes that have been there for three six seven months now yeah that aren't moving so now they're dropping the price because they want to keep paying the mortgage on something they're not going to live in it and we're starting to see it happen a little bit so if we're if history is rhyming and you know the stock market's been kind of crashing it seems like for the last whatever six to something months now is this now okay we're seeing this a little bit and it's gonna keep going as we go into the next year or what could history teach us about potentially what could happen now so you want to keep your eye on the federal reserve bank you want to keep your eye on the economy if inflation keeps going up if inflation keeps going up or rather if the federal reserve bank keeps raising interest rates that is the better indicator that you want to keep your eye on because if they keep raising interest rates that means mortgage rates are going to keep going up which will make housing more expensive so i'll give you a quick example if in the end of 2021 you wanted to buy a half a million dollar home you could put down twenty percent which is a hundred thousand dollars meaning you would borrow four hundred thousand dollars now you can borrow the four hundred thousand dollars at two point eight percent for a 30 year fixed rate mortgage in 2021 and so your monthly payments would be like 16.50 a month for that half a million dollar home if now today you wanted to buy the exact same home with no modifications no upgrade it's not going to cost you 500 000 it's going to cost you about 20 more which is about 600 so now if you put down the same twenty percent you're not putting down a hundred grand you're burning down a hundred and twenty thousand dollars which means you're no longer financing four hundred thousand you're financing four hundred and eighty thousand dollars now back then you were able to finance the four hundred thousand at two point eight percent today you're going to finance that 480 000 close to six percent on a fixed rate 30-year mortgage so you're borrowing more dollars at a higher interest rate back then it cost you 16.50 a month today it's gonna cost you about 28.50 a month to borrow the 480 000 for the exact same home so you went from paying 16.50 a month to 28.50 a month which is about a 70 percent increase in monthly cost on the exact same home assuming no modifications no upgrades that's kind of unsustainable unless you know there's more money coming into the markets unless you keep having you know a way for people to keep affording that and this is driving the issue now is how much higher can it go because if you keep raising interest rates what's going to happen your cost to buy the home are going to keep going up so unless you have a 70 raise in your monthly salary it's going to be much harder for you to afford that higher cost to buy that home so that's the situation that we're in right now and like you were saving saying it's driving this kind of shift in the housing market where you have a lot of people who want to buy a home saying i can't really afford the same home anymore i don't want to live smaller so i'll just keep the same house that i'm in right now i'll keep renting i'll keep i won't sell i won't move because i don't want to pay this higher price and this is where you know the question is again what's going to happen next if we keep raising interest rates and the monthly cost keeps going up well it's going to become more expensive and the 28.50 that i mentioned it also does not factor in the higher property taxes you have to pay and the higher insurance because your property taxes are based on the value of your home so when you're buying a six hundred thousand dollar home versus a five hundred thousand dollar more you know the property tax yeah you have higher property taxes you're insuring a more expensive property so your cost to own this home are significant i mean almost double what they were a year ago month to month and that's where it becomes i mean it's it's it's not rocket science to see why less people can buy homes today than they could a year ago just because the cost to buy a home has gone up so much so who is it the right time to buy a home for well is it the right time for anyone yes look okay if you want no you've got to understand now you're buying the home as an investment or you buy the home to live in because those are two different things right and a lot of people get this confused and i'm gonna explain why i really want to get into that because that's one of the biggest misconceptions in america i would say when you buy a home for yourself to live in we're told it's the biggest investment of your life so go big not a good investment for a lot of people it is not you should buy a home because you want to create memories there lifestyle environment exactly and because you can afford it you should not be trying to time the market with the home that you want to create members in the biggest thing is going to be can you afford the home and do you want to live there now to answer that question can you afford it there's three different things you want to ask yourself can you afford the down payment can you afford the monthly payment and can you afford the move-in costs because that gets overlooked a lot because now when you want to move it to this home furniture moving all this stuff exactly first you have the closing costs and then it's the cost of furniture the cost to move in and then when you want to move in you got to upgrade right because now you want to have a nicer kitchen you want to finish the basement you want to have the new appliances and furniture is not cheap and so you want to make sure you factor that in before you can move now if you can afford the down payment you can afford the monthly payment and you can afford the move-in costs and you find a home that fits your needs go out buy it get a 30-year fixed rate mortgage don't worry about it because now you can afford it if interest rates go down just refinance get the lower monthly payments don't stress about it right because you can refinance in a couple years if interest rates go down you can always refinance because you know if you're trying to time the interest rate market you never know what's going to happen just refinance if they go down so that's the main thing you need to know that if you want to buy a home don't try to time the market if you can afford it hey go out and buy it you know everyone's saying well what if home prices crash then i can buy then sure but what if they don't or if they go up by 20 waiting and timing yeah so you know it's it's it's the same thing right when you talk about investing your money in any asset stocks the best advice is time in the market beats timing the market this is what every fundamental investor says so now if you're trying to buy a home why are you trying to time the market it's not even an investment are you gonna uh you know wait to buy your shirt until you see cotton prices come down you're not looking at that you if you like the shirt that you buy and you can afford it go out and buy it now what's your thoughts on uh you know grant cardone always has this famous line it's he says live where you rent and rent what you own you know it's a great line it's a great pitch if you want to own a home there's nothing wrong with that just understand that it's not an investment for a lot of people for a lot of people the freedom of owning a home and paying off your mortgage is all that you want you just want to have that stress-free life and this is where it comes down to your lifestyle right do you want to live big do you want to live large you want to have all the luxuries and the nice stuff and you want to go for it all and you're willing to take that risk then yeah don't put all that cash down into a down payment and tie yourself down into the home rent take that down payment invest it in your business invest it somewhere else that way it can grow bigger but if your lifestyle goal is hey you know what i want a great space i don't have family i want memories i don't care about all that fancy stuff then go out and buy a home there's nothing wrong with that and this is where you just have to understand like i'll give you a personal example we have an office for minority mindset companies market briefs and all that i rent it we could easily buy the office you don't own those i don't know the office space i'm paying forty four hundred dollars a month plus utilities and all that michigan is cheap man it's just that cheap rent in michigan yeah you know it's still a lot of money forty years we're paying what 50 grand or so a year sure and uh i could go out and buy the property yeah but why don't i well if i wanted it's probably i don't know let's just say it's a million dollar building if i wanted to buy the building i got to take 200 000 from the business and go out and get by the property then i can own the building and then see some return the average real estate return somewhere between seven to ten percent a year okay if i took that two hundred thousand dollars and reinvested it back into market briefs my financial newsletter i'm trying to get a better return than 10 a year and so for me in the business sense that's why i'm renting because i know that i can get a better return by investing that money back into the business to grow the business and this is where you just have to understand the goals and your lifestyle and make sure your actions are aligning with your goals and your lifestyle goals because if you say hey i want to live large i want to have the nice things i want to have a big investment portfolio but at the same time you have gucci louis vuitton beamer but you have no investments your priorities in the wrong place sell the louis vuitton sell the gucci sell the beamer go on and start investing your money start building your investment portfolio if you really want to be wealthy so you can't speak out of both sides of your mouth you got to figure out what you want and just make sure your lifestyle aligns with that because a lot of people try to push this this is the right way to do something but that's not the case i mean if we just take a step away from finance for a second and look at for example health many people say this is the diet you need to have right these are the exercises you need to do well there's so many different things you can do and at the end of the day it's eat healthy and exercise right and now you can dig down deep and find what's right for you but at the core it's eat healthy and exercise in finance it's very similar you could say invest all your money into real estate uh don't own your home invest it all into real estate buy as many rental properties as possible some people would say you know buy it in stocks do this or build a business at the end of the day it comes down to live below your means invest the difference right right you know eat healthy and exercise live below it means invest the difference that is at the core and then you can get down to the nitty-gritty like i that's what i talk about right because i'm interested in that and that's where i try to learn more but i also don't try to say that this is the only thing that you can do because your goals are different than mine your background is different than mine your risk tolerance is different than mine and so you're going to want to make different investment decisions than me which is why i don't try to say this is what you need to do i'll say hey this is what i do this is how i invest in real estate this is how i invest in my business this is how i invest in stocks but what you do is gonna now depend on what is interesting to you which is why the financial education is so important because i'm not trying to i don't want to lead a herd of sheep right right i want you to be educated that way you can make smarter make better decisions for yourself but make an educated decision because the issue that so many people have is we assume that the reason why we're not successful is because we don't have the right tool set when in reality for most people is we don't have the right mindset it's not a tool set issue it's a mindset issue that so many people have where if you have the right mindset you'll realize that the tool side is right in front of you yeah and you just got to be able to harness the power of that so what's the best case scenario then for the housing market in your mind over the next 12 to 24 months well now the best case scenario really depends on who you ask because if you ask somebody who wants to invest in real estate or buy a home you're going to say the best cases real estate prices crash because now i can come in and buy at a discount uh but i think what you're trying to get at for the economic right if you look at it from we want a strong economy you want a strong real estate market the best case scenario is the better reserve bank can continue to raise interest rates uh slowly interest rate or sorry inflation comes down drastically and the economy doesn't get hurt that's the best case say one more time so interest rates go up slightly so from eight and a half to no interest rates sorry interest rates from a five and a half to so mortgage rates uh those are mortgage rates different than the federal reserve bank federal funds rates so five and a half to maybe six six and a half so we don't really go up on mortgage rates but interest rates is different than the mortgage rates right because if i remember that's mortgage rate is retail the interest rate is what's the interest rate sales right now the interest rates were rubbing around the two to two and a half percent range right now so it goes up to three percent ideally ideally no more that would be best right so mortgage rates interest rates don't really change and we see inflation come down magically and we see the economy not slow down so that's best case scenario if you look at it from an economic perspective what do you think could happen if you're like you know what if i had to make a great prediction well lewis look at this man you print the most amount of money in the history of time in 2020 and 2021 we're talking about you know at least six trillion dollars at the very low end you print this money injected into the economy now you're trying to take this money out you're trying to burst the bubble that you created without crashing the markets without trying to crash the economy there is a cost to free money we are paying the price for that through inflation so now if the price of everything has gone up so high people are struggling to pay their bills they can't buy more stuff because inflation is so high and we're already seeing the economy slow down we've seen six months of an economic slowdown which technically traditionally before 2022 would be considered a recession because before before 2022 if you saw two quarters of gdp meaning economic decline that was defined as a recession this year uh we're deciding that that's not true we're going to look at other factors broader factors so if we go one more quarter do you feel like they would say okay now we're in a recession i don't know uh they might try to keep kicking down the road and say yeah no it's not true it's one of those things where you know when did we start saying that inflation is not transitory it was very late so it was november of 2021 that we said inflation is transitory it was around march or april of 2021 that we said it is transitory what's transitory mean transitory means a short period of time right it's going to come and it's going to go because the original thought was we'll see a little bit of inflation in 2021 no way it'll go away by the end of 2021. well that clearly did not happen it said it'll go away by the middle part of 2022 that clearly did not happen we're breaking new highs in the middle part of 2022. now they're saying that it'll be gone by the end of 2022 to the beginning part of 2023. so that's one side on the inflation side now on the economic side it's we don't want to say anything we don't want to create fear or panic because people have jobs the economy is strong however if you dig deep you can start to see all these like red flashing warning signs that yeah potentially they could just blow by but you have a lot of warning signs on saying hey look like the inflation is still extremely high gas prices are still high we have an economy that is slowing we've been seeing unemployment numbers start to go up and these are the things that you want to pay attention to and even unemployment if i can mention that for a second there's a difference between unemployment which is reported and what's quote unquote real unemployment so i don't want to get too technical but when you see these headlines for what unemployment is this is something called u3 unemployment and what that means is it looks at a specific set of unemployment numbers and this is what they're reporting because now if you say what does somebody unemployed mean you might say somebody who doesn't have a job but what about somebody now who's an engineer you used to work at a great engineering company but you got laid off and now you're working at mcdonald's because you can't find another job that doesn't qualify under that or what about now if you are a full-time worker you're working at i don't know you're working at a factory you had a great job and then your factory uh is doing layoffs and now they've cut your hours to part-time even though you want to work full-time because the factory's struggling that doesn't count in this data that's unemployed it doesn't count yeah so none of that data is recorded here but those aren't the the stabilist jobs is what you're saying it doesn't have to be stable i mean we could talk about doctors we could talk about engineers it's just a matter of what is the definition of unemployment so the u3 it's not looking at that you three all it's looking at is fully unemployed well let's define it what it's looking at is you don't have a job and you haven't actively been looking for a job for the last four years sorry four weeks so what that means is let's just say that you lost your job and you decided that after four weeks that you no longer want to continue looking for a job maybe you want to stay home with your kid maybe you're taking care of a parent a relative whatever so after four weeks you stop looking for a job you're no longer considered unemployed under u3 so you're no longer in that data so there's another thing called u6 which does look at this it looks at things like if you are underemployed you're an engineer working at mcdonald's but you want to be an engineer you are a factory worker or any type of worker your doctor who used to have a full-time salary but now you're working part-time it doesn't really matter what the career is it's looking at somebody who's not getting the full employment that they want you are somebody who is more than four weeks out of looking for a job all these things are looked at in u6 and if you look at u6 it tells you a little bit of a different story than u3 so this is where you have to be again right it's being able to understand data a little bit better now i'm going to do a little bit of a pitch here because this is one of the things that we try to talk about in market briefs is this financial news and understanding what's actually happening because this gets a little bit complex now i don't want to go too into depth because i've got a whiteboard to diagram it all out but it gets a little confusing and this is where headlines don't tell the full story and you want to be able to dig deeper but it requires the financial education and the willingness to learn and if you don't want to spend all the time doing that that's where market briefs which is my financial newsletter completely free breaks it down into a fun witty and easy to read email that way now even if you don't understand this we explain it that way anybody anybody can understand even if you don't have any sort of financial education because these are the things that most of us are never taught we're never told this that you read the headlines saying unemployment is this and you assume that that's right but what is unemployment you have to understand these things and this is where you know understanding this level of finances becomes so much more complex because we're never told this so if you could predict the next 12 to 24 months of what you think is going to happen to the housing market and the economy sure look your best case what you think is going to be i definitely think that based on all this information i do look our economy has a lot of trouble ahead we are not out of the water and the question is when are we going to see the price of that there i mean look have we paid the biggest price yet absolutely not really worse our inflation issue is not going away and either we're going to kick it down the road further we might pause it for a little bit but then it's either the federal reserve bank is going to kick the can down the road because they're going to say you know what unemployment is rising it's a bigger concern than inflation so we're going to stimulate we're going to pump and that's going to create a bigger bubble geez or they're going to start fighting it now and we're going to start paying a bigger price right now because this inflation problem is not going away the economic slowdown will probably continue because of this inflation issue and the person who's going to decide what's going to happen is the federal reserve bank so the question is are we going to pay the price now or are we going to do it later if we do it later it's going to be a bigger price that we have to pay then if we pay it now it's going to be painful but not as painful as later so this is the situation that we're in where the economic slowdown is a real concern the inflation is a real concern you don't want to panic because nobody makes good decisions out of panic or fear but do you want to understand this that we're not shocked 12 months down the line where if the federal reserve bank stays true and they keep raising interest rates they keep doing quantitative tightening and they push the economy into a deeper recession that you're not like nobody saw it coming because that's what they said about inflation that's what they're going to say about the economy too because they don't want to put fear into the world just like they said in 2005 about 2007 exactly so what are you personally doing to prepare for the next for when that happens with your own money and assets and are you saving money cash are you investing now yeah real estate all that stuff and what do you recommend someone um to do whether they're an employee or maybe they have some extra cash sure so i would say you know this is a lot going to depend on you because i'll be very personal with what i'm doing because i'm an entrepreneur so i look for different types of opportunities and somebody else might so if you are an employee there's going to be different opportunities for you if you're a business owner there's going to be different opportunities for you for an entrepreneur there's different opportunities for you so i invest my money in five places invest my money into my own business i talked about market briefs i invest some money into real estate and invest my money into stocks and there's money into crypto then i invest my money into physical gold this is the order that i invest my money into this is my type of diversification now i understand what's going on and i do have some cash i always have some cash put aside for like you know things going wrong investments i always have some cash putting aside there and what i've been doing is i passively invest my money meaning no matter what's happening in the markets whether the market is up whether the market's down it's automatically every month you have a certain amount and this is happening at the stocks into crypto and into physical gold that does not change that never changes so i get paid money is automatically invested no matter what then in the past i've had my more active strategy where i would take money and actively go out and buy real estate i'd actively going to buy stocks and in this situation i'm looking for good deals meaning a good price so i haven't been doing that as much recently not because it was happening in the market but because i see more opportunities for me in the entrepreneurial business side so i've been investing money into market briefs like i talked about hiring more people on your team people building infrastructure and then i'm also working on um a tax firm so i'm gonna talk about tax for one second if that's okay because there's a very interesting thing happening right now because going off of inflation president biden just signed something called the inflation reduction is that 80 billion or something right that's a huge it was a huge huge i think it's even bigger than that 80 billion is just the irs the irs so the tax side so they're hiring they're investing 80 billion in the irs to start auditing more people essentially right to start trying to get more money from people and that's only one part of the inflation reduction act so let's go big to go small because the inflation reduction act is supposed to reduce inflation that's what the name says the font is i'm laughing because it's kind of silly because right how do you reduce inflation you spend less money uh because the government has spent so much money they didn't have which caused money printing you tax more people you collect more exactly so that's how do you now pay off all this debt remember the government doesn't make money they tax you the tax made they collect taxes and then that's what they used to pay off their expenses now it's not surprising that the government is running into an issue because they have 31 almost trillion dollars of national debt that they need to pay off this is not fixed rate debt so as interest rates go up their payments on this debt go up as well so we talked about what happened in the housing market imagine that on a 30 trillion dollar level now so the payments are getting bigger so what does that mean well if they have this pool of money either they're going to need to inject more money into the government the fed has to print more money but they can't do that anymore because of inflation or they're going to need more tax dollars so that's one of the reasons why through this inflation reduction act one of the things they want to do which is one of the most like financially interesting topics is they want to invest very heavily billions of dollars into the irs to help them beef up and collect more tax dollars and past tax dollars now i do want to clear up some of the false information out there because the act is working to hire 87 000 more irs workers that's crazy it is crazy especially considering that today there are about 80 000 irs workers double yes and no so the 87 000 people that they're hiring are not all irs agents and they're not all being hired today they're going to be hired over the course of 10 years and the whole idea is this is what they say again this is what they're saying what might happen is it could be a little bit different so i want to be just completely transparent because i don't want to mislead people i want to make sure everyone's fully understanding what's happening you have about what's scheduled is about 50 000 or so people in the irs are scheduled to retire over the next 10 years so these 87 000 people are supposed to replace them and beef up the agents that are actually going to be doing the auditing to go and collect more money now even if 50 000 people retire that's still adding almost 50 percent more people to the irs who are they going after well they say the wealthy the super rich and uh there's about a thousand billionaires in the united states do you need tens of thousands of people to go after them no so you go a little bit deeper now again what do we look at history i look at history to answer the question because they keep saying that we're not going saying it's not in the bill it's not written anywhere this is what they say that we're not going to go after middle income people or anything like that well in 2021 50 percent of irs audits were on people earning less than seventy five thousand dollars a year come on fifty percent fifty percent fifty percent wow how do they how do they know how do they uh is that public information go search it on google wow google has a lot of 50 percent of the audits we're on people that were making lessons a year wow and why are they doing that well probably because if you're making less money you're not going to have the resources to hire a good accountant and hire a good uh attorney to represent you so it's a little bit easier less cost i mean it's just it's just easier right i mean you're maybe less financially savvy than somebody who's making half a million dollars a year or two million dollars a year because now you probably have more resources to defend yourself so that's a bigger fight for the irs and you're probably more protected because you have good advisors who've told you what to do because now let's say you're making you're filing your taxes you're doing all the right steps and maybe if you make a million once you start making a lot of money like if you're making over a million dollars a year you're not trying to play the game of trying to hide ten thousand dollars because now you're already under scrutiny yes the irs is trying to see you do something wrong and so if you try to get 10 000 under the table it's a bad idea because you already know you're being watched you're trying to you do everything by the book you're trying to try the best and you have good advisors to guide you to do everything legal so you can pay the least amount of taxes impossible legally now if you're making 50 grand a year and you have a side hustle making you a thousand dollars a year you might take that in cash because you might say this is a grand a year it's just the reality right you're you're taking pictures at people's weddings you're you're doing whatever you're making some cash and you're you're just doing it under the table and the irs wants that thousand bucks and this is one of those things where it's not surprising because if you look at what's been happening over the last couple of years it's this is almost like been a foreshadow of things to come because you remember over the last couple of years we've seen this new rule on venmo right on venmo transactions where they want all venmo transactions over 600 or something like that where now if you're you know unless you're you're a photographer and you're taking pictures at your friend's wedding and he pays you 700 and venmo has to report that they want to know that they never said why but now you're starting to see all these things start to add up where if you're doing these small things you know it's just like things starting to fall into place where oh no wonder they started wanting all these details for this no wonder they started really going after cryptocurrency brokerages no wonder they really started doing all of this stuff maybe creating a digital dollar because they want to be able to see every transaction which means they want to be able to tax every transaction of course i can't validate this but i mean it's just like puzzle pieces starting to come together and so this is where the tax thing why is it so important because of inflation because of the national debt the government needs more tax dollars to be able to go and fund their payments and so what are they going to do well they're going to try to find the easiest hanging fruit is it going after a billionaire probably not because the billionaire is going to say come after me i have my resources i have my army all my accountants they've got everything yeah we have everything there everything is documented because we want to play by the books because we know you're already watching right now i'm not saying that everything always is right right there's of course exceptions to this but this is where you just have to understand you know they say that they're not going to go after anyone making middle uh income whatever but after you go after you look at the thousand or so billionaires okay you gotta look at everyone else i mean so this is again right that's what we would have to you got 80 000 people working on it it's like all right it's just looking at history right i mean this history is the best indicator for what's coming i keep saying that i'm sure your audience is getting very bored i'm going to be saying this but i mean it's what the best indicator because i can't look into the future and see what's going to happen but i can look in the past and see what has happened and i see that hey this is what happened in 2021 this is what's been happening because this is just the situation and so for me i've also seen a big difference between good tax advisors and bad tax advisors because is that why you're starting a tax that's why because i you know it's the entrepreneurial mind where when i get scammed i get screwed over i get you know these things happen it makes me want to find a new solution that's how i started minority mindset i got scammed and i started a minority mindset i got screwed over when i started my event planning company i got completely screwed over my first real estate investment deal pretty much every part of me had to do with something really bad happening yes so i had a really bad tax advisor he was really just an accountant who filed my taxes and was never on time and i got this call it's horrible it was just a mess yes i got a call from my accountant one day i'm in the office this is right before my morning huddle so we have a 9 30 a.m morning huddle calls me i think it was like 8 45 in the morning i'm in the office he says hey jaspreet how are you i said good how are you doing he said hey listen i need you to do me something uh can you wire or send the irs a hundred thousand dollars by the end of the day today and can you also send about fifteen thousand dollars to the state government by the end of the day today i was like what he said sorry we had some milk calculations we did something wrong we missed this and you need to send us by tonight and i was like geez are you serious oh yeah one more thing you're probably gonna have to pay a penalty on this as well this is a completely true story like when was this this is not i mean this is less than a year ago oh my god and so it's i mean it's painful it's very painful and so i'm like okay like i was very frustrated because i'm like what did i do wrong like what do you talk about you didn't do anything wrong and i was like well if i'm the one that has to pay this and i'm the one who has to pay the penalty something's not right here and so i paid it and then i fired him pretty quickly right because i you know that's that's not the way i like to do business i like i want i want everything to be clean but i also want people who care about what they do and he was a cheaper accountant yeah i got what i paid for and so i went on the hunt for uh top-of-the-line accountant and i pay a lot more than what i used to however the situation scenario is extremely different because he has a very different personality about a different persona and the way it works now is one he manages all my books on time and ahead of schedule so every month he meets with me and he shows me hey just please here's your profit i'm sorry we'll start from the top here's your revenue here's your expenses here's what your expenses look like here's how they changed here's your profit here's your tax liability and here are the things that you can do to limit your tax liability that's cool here are you know three recommendations or whatever that we believe based off of what's happening right now to legally limit your tax liability and he has given me so many interesting ideas because the tax code is over 2000 pages long and you need i'm an attorney i studied a lot of tax it takes a lot of knowledge and education to understand and read the tax code but then things keep changing all the time like even this inflation reduction act is changing corporate tax structure so you need somebody who literally eats breathes and all they care about is tax and this is this guy right and i'm like dude like this is amazing like i love this because i don't have the time i don't want to spend my time thinking about taxes and all the cash flow stuff i want to build my business and so i got to know him got to build see how he worked i really liked it and after a number of months of working with him and seeing him in action i was like hey man like you have nothing on social media like can we work together like let's like he's very good at what he does but i was like let me work with you like i think we can create a lot of things here because there's a lot of small businesses that need what you have to offer because there's a lot of small businesses who have bad accountants so all they do is file their taxes and you need a tax advisor especially now as we're going to see a big change you need an advisor who's going to guide you on what to do with your money how to document what you do like just to make it completely seamless that way you don't have to stress about it right and he was like i'm down so over the last couple of months we've been working to build this together it's not launched yet we're just talking about it because it came a conversation but uh that's something that i've been really working on so you know if you're listening to this and you want a good tax advisor just email me team the minoritymindset.com or send me a dm on instagram minoritymindset and i will connect you but these are i mean this is where what am i doing i'm i like entrepreneurship i like this stuff because it gets me excited it's the way that my brain works it's the way that gets you my purpose right and so i do that i like investing in real estate i like investing in stocks i'm passively doing it in stocks but right now i just see more opportunity for me to invest in things like market briefs to invest in things like this tax firm because like i see the opportunity it's fun i have a blast doing it i get to meet really cool people so you know it's just it's a matter of now what is a lifestyle now if i didn't if i wasn't an entrepreneur what would i be doing yeah i'd be stacking up cash to find good investments either in the stock market or the real estate market or to buy a startup because it's very accessible now thanks to the internet thanks to all the crowdfunding sites out there and i'd be passively investing like i would not change that so i mean i think everybody should be you can put 100 bucks a month away into stocks or into into an automated account that is investing for you did you know if you're 21 and you start investing 100 a month and you never change that and you just get a 10 return on your money which is the average stock market return and you do that until you're 65 you will retire a millionaire come on we're talking about less than four dollars a day 100 a month 100 bucks automatically automatically going into a index fund and you just keep trying to match the market right doesn't mean you're going to get 10 returns every year decades you will yeah that's what the historical stock market return is now you can just plug this into a calculator and you'll see that the hundred dollars a month for from 21 to 65 66 you'll be a millionaire but if you don't start that until let's say in your 20s you don't care about money you're all partying you're not having a good time in your 30s you're trying to get a good job trying to figure things out and now in your 40s you're like and i got to put i get 1000 bucks a couple thousand bucks it's very different if you if you're 45 and you're putting a 100 bucks aside at the same 10 return when you retire you're gonna have a hundred thousand dollars not a million not even half a million we're talking about 100 grand it makes that big of a difference because time is such an important factor i'm such a big fan of doing this i started doing this from my late 20s actually gotten a whole life insurance in my late 20s and my dad was in life insurance and so i learned about it when i was a kid but i started i bought my own policy i think when i was like late 27 and i keep buying more whole life insurance um but i started doing the automatic payments from my checking account right into an index fund yeah every month so now when i was in my late 20s in my like early 30s and it's you know in seven or eight years it's been just compounding and growing and it really starts to grow and as you earn more money you can say i'm gonna put 200 bucks a month in a 300 buster and really put that extra money in automatically so you don't even see it you don't think about it and you know you're going to be making money for the long haul exactly how many bucks a month it's simple it's so simple and there are so many apps out there that make it so easy that don't even charge you a fee that there's really no excuse not to do this and you just set that up and that never changes yeah now what are those top apps for people you use m1 finance m1 files and one finances easy to use you know there's tons of them out there do your own research they are a sponsor an affiliate for minority mindset full disclaimer i'm not getting paid to say this here but do your research there's a ton of apps out there uh what are the other apps what are there a few others that you you think are for dollar cost averaging honestly like you can do something like ftx does that like acorns of her acorns does something where you can start with a dollar so they like round up your change yeah um does it yeah there's i mean if you go to the minoritymindset.com because my team is literally doing reviews about all this stuff yeah they i don't know all of them off the top of my head because i use what i use but if you want like reviews just go to the minoritymindset.com we have dozens of articles over there on that awesome but that never changes yeah past the investor forever okay and then on the active side now this is where you can understand you a little bit where maybe you want to invest in real estate maybe you say i hate that idea maybe you want to invest in individual companies maybe you say i hate that idea but this is where now you can also start putting some extra cash aside to be invested so this is money where you're looking for a good opportunity and you know the percentage of how much you're going to do is going to really just depend on you some of you are going to say i don't even care about that i don't i just want to pass it but never have to worry about it fine some of you are going to say all passive but i want to i want to be in the game i want to run around involved what's happening i like that and i like that and so now you're putting some cash aside into you know maybe it's a bank account or whatever and you have some cash sitting here waiting to be invested maybe it's waiting to be a down payment for a home or you're waiting for just a good buying point in the stock market but this is where you're doing your research right now and you're trying to find the right opportunity where now you just want to take this cash and go out and actually buy something and again right this is assuming you're not an entrepreneur and there's different opportunities for different people in different stages of their life and this is just understanding you where you are in your life if you want to be in the entrepreneurial side building your own business if you want to be in the i want to invest in real estate side or i want to be in the stock market like it's just it's a matter of personal preference because at the end of the day we try to make investing so complicated but it's live below your means and that's the difference and that's the ultimately the solution to becoming wealthy no matter what market you're in no matter what economy you're in no matter where in the world you're in that is the simple solution now you can get as nitty gritty as you want but you once you understand that you have the formula to become wealthy if you guys are loving this make sure to leave a comment yes below if you want more with just fleet and myself comment below make sure to follow just beats on his youtube we'll have it all linked up leave a comment if you want to learn more about becoming financially free in the future with jasper d amen my man thank you for having me on louis if you got value from that then go ahead and stick around for more coming up right now what do you wish we taught everyone from the ages of 10 to 20. five different things around money first thing would be what is money because money as we know it is fake our dollars or just pieces of paper i grew up thinking that our paper dollars are like the holy grail you want to save this money because it is the most valuable thing there is as i became older i started to realize that that's not the case our paper dollars are just pieces of paper it's fiat currency which means it's issued by the government and the value is backed through the strength of the government now we're lucky here that the united states is the world's superpower we have the world's strongest military we're the world's strongest economy but we can't stay on top forever and you know inflation is when the value of a dollar goes down so these dollars which many of us think that if we hoard this will become wealthy saving money to wealth is actually keeping you poor and it's making you poor each and every day so the first thing you have to understand is what is money second thing i understand is what do wealthy people work for and most of us the majority of us are taught to work to get a job and climb that corporate ladder but wealthy people are doing something completely different they're working to own the corporate ladder they're working for something called equity and this thing really blew my mind because wealthy people are not working for that paycheck they're working to own a piece of the company that way they can get a piece of the profits so the best way to understand this is you know a lot of times people complain about how much money i'm making i wish my boss paid me more and this is where if you start to understand the system you'll start to ask the right questions see a big company you have to ask the question who are they working for are they working to take care of their employees are they working to take care of their customers neither they're working to take care of one person they're shareholders it's this concept called fiduciary duty right i learned this in law school the executives of a company have a fiduciary duty not towards the employees not towards the customers but towards the shareholders the owners of the company now what that means an easy example of this is you're going out to dinner with your girlfriend or your wife and uh you're on a date and you get a text from one of your good friends hey let's go play fortnite right now your fiduciary duty at the moment is to be with a girlfriend to be with your wife to be with your partner to spend time with him or her if you go out and leave you're going to get in trouble right yeah so it's who is your alliance too and the shareholders the the executives ceo and the executives company their fiduciary duty is to the shareholders the owners of the company so what are they trying to do they're working to drive up the valuation of the company so once you start to understand that you'll realize why there's this big discrepancy between what people are paid and what people want to be paid and when you start to understand that you're going to change what you do with the money that's why i said a minute ago or a little bit ago wealthy people are working to climb not climb the corporate ladder but own the corporate ladder so how do you get the equity that ownership you have to own a piece of the corporate ladder now if you work for a public company that means that you can take some of your income and you can buy stock in the company maybe they pay you with equity maybe they give you some sort of revenue share that's what we do with my companies or if your company doesn't do that then you have to start taking this money that you're earning and you have to start investing it into a place where you're getting equity maybe that means stocks maybe that means real estate it could be a number of different investments but you have to work towards that equity yeah the third thing is that you have to think bigger i know i grew up thinking that somebody who looks like me somebody who's brown somebody who wears a turban somebody who didn't have entrepreneur investor parents could go out and do this because you think that somebody like me can't do this my parents also told me that i couldn't do it i didn't know anybody i don't know any investors but you have to be the one to take that first step and once you start to take the first step you're gonna learn and see the second step then you take the second step and you're like oh i can start a hundred dollar investment here you don't have to start with you know hundreds of thousands or millions of dollars start with a hundred dollars apps on the internet make it so much more accessible right anything is possible if you live in america you speak english you have more opportunities than really anybody else in the world people will literally risk their lives risk their lives to come to this country because there's opportunity here and so if you're here you have the ability to understand what you and i are saying and you have that technology to do it you're blessed now what do you do with this right you have to go out and start learning you have to go out and start doing and then the next thing you have to do number four number four is you have to understand the concept of debt because we live in this consumer culture and it's interesting where you know we want to live this flex lifestyle right i want to show off on instagram i want to show off my new car my new chanel gucci purse and we kind of get caught up where i need to live a certain lifestyle that way people can think that i'm rich but what you're doing now is you're living broke right making everybody else rich some people think you're rich you're product rich you have a lot of nice stuff but you're broke and so when you live that type of lifestyle you are the reason why gucci louis vuitton chanel are making so much money but is keeping you broke the richest person in the world sometimes he's the second sometimes he's the third is the ceo of louis vuitton no what really yeah bernard or naught and why how did he get there because everybody wants to look rich everybody wants the louis vuitton and you know you i saw this in this the pandemic especially we were in a recession in 2021 but luxury sales of products were breaking news drama really you're breaking records in 2021 why is that stimulus checks went out people had cash and some people use that money to save some people use the money to pay down debt some people invested that money but a big chunk of people took that money to places like gucci louis vuitton and now you go and spend it you would think when the economy is well i guess when people are losing their jobs and there's financial uncertainty of the future you think people will be saving or investing not spending on luxury goods especially if you can't even go outside to flex it you can only do it on social media you don't need to go outside anymore you can just do it on social media and so if you don't have the cash do it people are going into debt to buy and it's becoming easier and easier because of now things like buy now pay later it is one of the fastest growing industries in fintech i love financial technology but it breaks my heart i mean it just it rips my heartstrings when i see the growth of this buy now pay later because what does that mean i can go out and buy anything i want not pay for it today pay it off over three months and then if i don't i get slapped with 25 interest and if you are 18 or let's just say 21 i gave you 6 500 you never invested another penny but you invested those 6 500 and you could get an 18 return on that money and you retired 65 and you look at this investment portfolio you would have over 11 million dollars wow now everyone watching this thing where the heck am i going to get 18 on my money exactly but your credit card company is doing it every single day 6 500 is what the average american household has in credit card debt right now and you're turning around paying these companies 18 20 25 a year and they're the ones that are getting rich not you so what's happening you're going into debt to buy liabilities which are things that lose your money and then you're paying interest on top of that which is making everybody else rich which leaves no money in your pocket to make yourself rich and you have to break out of that mindset so what do we need to know about debt then how do people get comfortable understanding about debt either using it in the right ways and eliminating the debts that don't support our financial growth yeah so the first thing is never finance anything that isn't going to pay you okay so give me an example gucci your vacations your car stop financing these things that aren't paying you and people are going to get upset when i say your car because they're going to say wait how am i supposed to buy a car without a car payment don't buy a 100 000 car unless you've got the money in the bank to buy it plus more buy a used car exactly for six grand exactly go buy x to use car good working condition car with cash write it for ten years exactly the first time i made a million dollars in a year my car was 500 bucks my employees had better cars than i did i had a 4 000 car for the first five years living in los angeles four thousand dollar car used car 1997. i love it was the car yeah when it's when it was made and uh that thing was great yeah that was comfortable got me from a to b yeah it didn't break down exactly i didn't need to be flashy exactly i still have my five hundred dollars you know and it's one of those things where you know because i fell into this trip where the first time i started making money uh you know in my culture cars are a big thing uh the punjabi culture people really want to put money in their cars they want to look cool right so when i was 17 16 17 i started making a little bit of money because i was doing my side hustles the first thing i did was i put a new rims in my car then i put tints on my car two 12-inch subwoofers in my trunk right i put the tins on i put a new sound system in there lights around glow in the dark yeah i had a toyota right and and uh then the next thing i was gonna do is i called my cousin i said guess what i got three grand in the bank i'm about to put two uh lamborghini doors on my toyota trust me you're stupid don't do that and so he sat on the phone with me for like 20 minutes convincing me not to do it luckily i didn't i'm really glad that i didn't but that's where all my money was going i looked cool my car was cool and that's where all my money was going i had a thousand dollars in my bank and i went out and i bought a thousand dollar watch i was like 18 years old right because it was like i was in that industry the entertainment industry i wanted to look cool and then you know i started to read these money books and my mindset starts to shift and now all of a sudden is the comp like i went from one polar extreme to the other polar extreme i don't want to spend a penny on anything on anything unless it's making me money exactly i don't want to spend anything unless it's making money so now i'm saving as much money as i can i'm investing my money as much as i can i'm trying to build my business and and i mean i'm talking like i'm running my shoes into the ground they have holes in them i put a piece of tape wrap it up i'm going to school i got rental properties but i got my shoes that are taped up right and it's like i i realized that i'm going to go like i'm not going to make those same mistakes again and you have to break out of that mindset the first time i made 100 grand a year i was in school and i was living in a apartment paying 400 a month including my my um my water my electricity my cable my gas my internet everything and the reason was is because i i didn't have a room i slept on the living room floor i had a little mattress i used to pull that into the living room put that down go to sleep at night wake up fold up the sheets put them away drag that mattress back into the hallway because i'm like you know i realized that the power of compounding your money i realized the power of putting your money into the right assets and i'm like this is my time to build i've been blowing this money that i'm earning on things that are making everybody else rich right i'll spend money on that stuff a little bit later right now i want to make myself rich yeah and so you know you have to just first understand what it is that's worth spending money on and what's not and then you know if you do have that debt you've got to come up with a strategy to pay it down as fast as possible first thing you can do if you have a lot of credit card debt call up the companies see if they're going to be willing to just give you a lower amount see if they're willing to work with you say look i got ten thousand dollars with the debt i'm never gonna pay this off it's not gonna happen how about you work with me and give me five thousand dollars and i will work to pay that off right you start to work with them see if you can do something then you can consider moving some of that money to a zero percent apr uh card if you have 12 to 18 months to do that that way now you can aggressively you got to do the smart because if you're just gonna keep doing the same things you were before don't do it but you have to start aggressively paying it down you stop spending money that way now you can pay down this debt as fast as possible and then you work to earn more money and the money has to go somewhere as you're earning more money you live the same lifestyle if not smaller and you take all this extra money and you use it to pay down your debt that way now you can start building right you got to lay that foundation you got to start working to grow upwards but you have to get aggressive is there never a time where people should go into debt the right type of debt the credit card debt student loan debt you know buying a car and going in debt on that those things i'm understanding it's not helping your financial future yeah when is it the right time or is there a right time in your mind to take money out and spend interest on that money depends right if it's something that's going to make you income and you can manage the debt then yes but it's not for everybody right some people don't have it in them to manage the debt some people don't have it in them to manage investments some people don't have it in them to run a business if you're not the entrepreneurial investor type and you don't like looking at numbers you don't like managing money you don't like trying to grow this stay away from it now you go up maybe you can get debt to buy a home but that's it but if you are more the entrepreneurial type you you have it in you that you want to grow now if you're using debt you should only be using that to buy something that's paying you with income something that's going to make you more money do you have any debt out right now right now i do not i have people paying me loans but i personally don't have any debt right now and uh i i kind of went through this phase where i have all this real estate but i have no debt on it and the reason is is because i'm waiting for the right opportunity i will i will have more debt really yeah i'm just waiting for the right opportunity because right now all my real estate is paid off you paid off all the rest how many properties do you have uh units in the dozens a number of units but now i'm just waiting for the right opportunity and it's all paid off i'll pay off so now there's just cash coming in there's cash coming in and you know you still have that that's rented for 850 a month that eight thousand dollar place eight thousand dollar place that's just bringing in 800 bucks a month 850 a month clear and free just yeah you got to pay your expenses your property taxes insurance your maintenance your management fees uh but right now i have no debt on it and so now what i'm waiting for is how much could you sell that for now uh probably a hundred thousand hundred twenty i mean i don't know the exact same thing in that range it's not bad yeah i mean it's it's crazy because i never i when i buy real estate i never look at what can i sell this property for i'm looking for one thing cash flow cash flow yeah and so this is a big mistake that leads people into a lot of problems in real estate because when you start buying real estate hoping that you'll be able to sell it for a higher price in the future and things don't go as planned then what yeah you're screwing now you're screwed so you know for me i look at uh one thing cash flow and will i be able to see more growth in this area so i'll look where businesses are moving where's money moving to and then that's where i want to invest because i know if property prices go up hey it's icing property prices go down it's okay that's like i'm a rent which is covering my costs so what's your goal right with the the dozens of units for the opportunity for something bigger or what's the plan something something yeah it can be anything something bigger in real estate and i'm looking for the right opportunity but again my focus now isn't in real estate like it was before a few years ago i was heavy in real estate now i was doing everything that i can there and a lot of opportunities were there i bought a property in 2021 i haven't bought anything in 2022 yet but my focus now is building my business because i i see a bigger opportunity there for me than real estate that's why i've been kind of i'm still involved in real estate right but not the way that i was because you could because you can earn more with your business if you put the attention and the energy and the money into building the team and the resources and technology and those things and it's more it's more fun because it's a lot more active for me yeah and then you know once this gets bigger then i'll go back to real estate but right now like for the last few years i've been kind of phasing slowly away from real estate as i can transition more into the business because you know it's just this is more fun for me yeah okay so understanding debt was the fourth thing what was the fifth thing you wish people learned uh from 10 to 20 years old about money you have to be willing to make mistakes take risks and start and this one is hard and it sounds simple but a lot of people that i know a lot of people they are so hesitant to making that first investment because what if i do something wrong what if i make a mistake what if my investment goes down and so the simple thing that's happened to me multiple times yeah but you learn every time right it's your your tuition it's your real tuition uh and you have to be willing to try things because if you don't you're going to get stuck in the game oh what if what if i lose money what if it doesn't work out well what if it goes up what if you learn i have made a lot of mistakes i made a video on my youtube channel where i went through my worst real estate deal ever it was my third property that i ever bought it was a home in the city of detroit and i made every mistake possible now i'm still in college right i don't know what's going on exactly with real estate investing and i mean i bought the property and i bought it because my contractor at the time told me that we can make a lot of money on this deal would be able to rent it out we could flip it if i wanted to and he was like don't even worry about getting a home inspection now when i buy a property now the first thing i do is i get a property inspection where somebody walks through the deal make sure a third party an independent person and they tell me anything wrong with the property and the foundation in the plumbing in really anything with the property so i know what i'm getting myself into and so he told me don't do that he said don't worry i already walked through he's a contractor so i figured he knows what he's talking about uh all you have to do is spend 5 500 and i will make sure this property is ready to go wow so i said okay let's do it so i bought the home i gave him a check for half or maybe 2 500 or 3 something around there 3 000. and a week goes by nothing starts two weeks go by nothing starts and i call them i said hey man what's going on like i thought we were gonna have this done in two weeks here we are two weeks later and you haven't even brought your materials here so i got caught up with something something's going wrong and so now two more weeks go by he brought some materials there he started painting one wall and that was it and so you know i'm getting upset because now it's like you know every day that this property is not leased out is it's costing money and still nothing's getting done another two weeks go by and now i'm like okay look what's what's going on we got to get this taken care of because now we're six weeks into this deal you haven't done a single thing you keep putting me off you you took my money and nothing's happened and so long story short on that he ran away he was having financial difficulties that's why he wanted me to close on this deal because he needed some cash and now he's gone so now i have another property that uh somebody was working on a manager and he was having some issues at my property he was causing some problems so i figured he's causing problems there how about you come work at this property and you need a home you can live in this home for free fix it up just fix it up yeah and so he he said okay so now i thought all right you know i i found a good deal here i've got somebody who'll fix it up he'll live there take care of it and it's gonna cost me less money and so now he's living in this property and he's like how about this how about you just open up a charge account at home depot and i'll just go buy stuff and take care of it at the home i said okay so i go open up the charge account he starts buying materials not to work in my home but to work on other people's properties oh my gosh so now i'm like dude like you're spending my money to go work on other people's property so you can make double profits over there you haven't started any work on my home you're not paying me rent you have a dog that you're not taking care of who's pooping everywhere in the property and it's not being taken care of and so now how do i get somebody out of this home i got a victim out of my own property there's no lease in place so now as we're going into all these legal issues of how do we get this person out of the home we get him out of the home it took me months to get him out the property now is destroyed oh man there's crap little crap all over the home he damaged the place did not take care of it and now it's like we have to start all over from negative to start fixing this property up so now we start fixing it i got a licensed and insured contract there were months into the deal and he wants i don't know like a lot more money at least 10 grand if not more to start doing the renovations and we start digging deep and we start to see problem after problem after problem so now it you know every cost keeps adding up now the home is ready to go and i'm like all right fine and everybody told me just please don't license this home with the city of detroit as a rental because nobody does it and this is you know again after the 2008 crash the detroit went through his bankruptcy they were having their own issues but i don't like to play games i want to play by the rules so i said i'm going to get it rent i'm going to get a license for rental when you get a license for rental they're going to send their own property inspectors out to the property and they're going to inspect it and make sure that it's okay so now the property inspectors come out and they say i need to lift up the home so what do you mean lift up the home they're like oh yeah we need to raise the home i don't even know that you could do that apparently you can and it's very expensive wow so i lift up the home and then we start running the water in the property and it turns out that the water is not draining to the main city line apparently somebody previously living in this property had poured cement down the main drain now in order to get this property working we have to bust out the cement in the basement take out this pipe put in a new pipe report the cement and then these property inspectors start disagreeing with one another one person says that you need a 10 foot electrical riser so we make it 10 feet the next one comes says why is it 10 feet it needs to be 13 feet like your first person said 10. and now they start fighting with each other and we have to keep paying for these inspectors to come back they keep charging me permit fees for everything if i want to paint the windowsills it's a 100 permit fee change the smoke detectors 75 permanent fee so this goes on and on and on and on for months finally now we're approved for rental i was like oh my god like this is the biggest headache of my life we get a tenant in the property we get licensed tenants in the property and now we have the license and the property inspectors just decides to go back to the property they don't tell us they just go back there even though we're fully licensed they had no reason to go there they knock on the door and apparently we didn't know this the tenant was uh having a babysitting operation in a property so now the inspector sees this that the tenant is running in a legal babysitting operation he tells us he finds us tells us we need to evict the tenant and now we have to start this process all over again so after that point i was like you know what just sell this property wow because this is the biggest headache and that was the only deal i ever lost money on but i like i learned a lot it was my tuition so you have to be able to learn be willing to make mistakes and then be willing to grow from those mistakes go on and you know keep willing to go so oftentimes especially like businesses they think that their price is the most expensive thing that they have in the cost and it's not so think about this if you've ever asked someone hey i'll give you my service for free and they said no it's because there are other costs that you're not taking into consideration which also means a lot of times your price has far more wiggle room in it than you think it does

Channel: Lewis Howes

Views: 480,680

Keywords: Lewis Howes, Lewis Howes interview, school of greatness, self help, self improvement, self development, personal development, success habits, success, wealth, motivation, inspiration, inspirational video, motivational video, success principles, millionaire success habits, how to become successful, success motivation

Id: aE3ENLhhSrw

Length: 94min 14sec (5654 seconds)

Published: Wed Aug 31 2022