Building wealth is possible if you’re determined to achieve your goals and learn your way through. The joy you have always dreamed of is attainable. Listen as Ava Benesocky and August Biniaz talk with Damion Lupo on the importance of financial literacy to break free from the chaos and confusion of money. Damion is a financial mentor and the creator of Black Belt Wealth. In this episode, he discusses how he helps empower people and boost their confidence to achieve financial freedom. He explains different aspects of passive investing, personal finance, retirement funds, investments, and managing your expenses. Tune in to learn how you can start taking those steps to be financially free.

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About Damion Lupo

Born with an entrepreneurial spirit Damion started his first business at age 11, (even hiring his parents for logistics support). Over the last quarter century he’s started and owned more than 50 different companies including an insurance agency, precious metals firms, a venture capital company, a coaching and consulting firm, and more than a dozen real estate investment and development companies. He’s also the founder of Yokido ™, his own a martial art and holds 3 other black belts.

He is a sought after financial consultant for high profile private clients. Using a vast depth and breadth of knowledge on financial markets, money psychology and unconscious pattern motivation he’s an expert at quickly assessing hidden financial cancers and holistically healing his clients and organizations through awareness, empowerment and vision development.

Damion’s personal philosophy centers on Self Responsibility and a conviction that the only path to freedom is through candor, growth and a big vision. That big vision ideal is what drove him to narrow the focus on the Retirement System and teach about the eQRP®, a tool to design retirement vs. get destroyed by it.

Today Damion works with change agents to Disrupt Wall Streets manipulative system of enriching itself at the expense of its client. He’s on a mission to Empower Main Street through tools and teachings of financial transformation. His overriding mission and passion is to elevate humanities power and control over their life by reducing the complex into the simple and creating a transparent conversation around money and investing.

Financial Literacy Crash Course – Damion Lupo

We’re excited because, in this episode, we’re joined by Damion Lupo, the bestselling author of a dozen books on personal finance, investment and retirement strategies. Damion is on a mission to free one million people from financial bondage. He hosts the Financial Underdogs Podcast, ripping conventional wisdom apart for the main street investor looking for the truth about money and investing.

REID Damion Lupo | Financial Literacy

Not only has he started 50-plus companies but also founded his martial art, Yokido. Damion developed the ultimate investor retirement tool called the eQRP. His strategy gives individuals total control of their retirement money to invest in real assets like real estate, gold and crypto. August and I believe this interview with Damion will bring great value to both active and passive investors looking to understand the fundamentals of financial literacy and independence. Welcome, Damion. Thanks for being here.

It’s great to be with you. Thanks for having me.

First off, I wanted to say how thrilled and honored we are to have you on our show. Having done some research, we realized that you are a thought leader in financial literacy, which is one of the most fundamental foundations of living a fulfilled life.

A lot of times, people say, “Money is not that important.” I always look at that and say, “Air isn’t important either unless you get stuck under the water and it’s the only thing to survive.” I’ve been scuba diving in Fiji and there are places where nobody has any money. They have the loincloth and that’s it. They’re happy. Money doesn’t matter. Unless you’re there, it does matter. People need to take ownership of it. That’s the work that I do and what you are working on and sharing with people. It does help people get out from the grips and the bondage of the money shackles.

I’m excited to have this conversation. Start by telling us a bit about your background and perhaps your start in real estate.

It’s interesting because you are up in Canada on the Westside and I was not too far away. I was a little bit further North. I grew up in Alaska. That whole experience was very strange in retrospect because when you’re in a place that’s more distant than Mars and you leave, you go, “There’s a whole world out here.” I left there and started doing everything opposite of what I was told to do. I’m sure my parents were cringing at the time, trying to figure out what was happening. I’m going to college and starting bookstores. I got thrown out of school because I put the bookstore out of business and started businesses with no business experience.

I did all these businesses and all these things. I started my 1st business and hired my parents when I was 11. I did that because I didn’t like being told no. I say a nation of snowflakes in the United States but this is in Western civilization. People have gotten soft or used to doing whatever big brother, big sister, the big government or big tech says they can or can’t do. I always resisted that, pushed back and said, “That doesn’t make any sense to me.” This is important with money or religion. It doesn’t make any difference. We have to be willing to ask questions. I have always asked questions.

I got myself into trouble in the 2000s because I went out there and asked some questions. I made some money. I’m so smart. I built this $20 million real estate portfolio and thought I was invincible. That resulted in me losing $25 million. When you have $20 million and you lose $25 million, that means you’re not smart. All of a sudden, you’re pretty dumb. I realized how not invincible I was. That was part of the transformation process.

REID Damion | Financial Literacy

Financial Literacy: The missing thing in business today is candor. The more we can do that, the more people will start thinking. The biggest problem we have in society is people aren’t thinking; they’re just being emotional and reacting.

 

It’s important for us to be humbled and sometimes humiliated to learn the truth. When I lose, went to negative $5 million, was homeless, living out of my vehicle and had to start over, one of the things I realized in that process is that mistakes don’t kill you unless you’re in Alaska, in the Arctic circle, which I was where you could be eaten by mistake by a polar bear. Unless that happens, your mistakes make you stronger.

We’ve gotten to the point where most people are so afraid of making a mistake and feeling stupid or being judged that they never grow. It’s this idle merry-go-round. I spent all my time helping to empower people and lend them confidence. People have the ability to be free. They truly do. It’s a choice like taxes are a choice. We have all this free will. We just let go of it and allow people to take over our thoughts, thinking and lives and become part of the matrix. I have a real big problem with that.

I spend my time like this saying what needs to be said. Jack Welch, the former GE CEO, said, “The missing thing in business is candor.” The more that we can do that, the more people will start thinking. The biggest problem we have in society is people aren’t thinking. They’re being emotional and reacting. That’s the demise of any society when people aren’t thinking.

You’ve been in real estate for a while and been through a couple of downturn cycles. For the newer investors reading, if you could please talk to us about your experience with the 2008 financial crisis. Is that when you went from minus $25 million?

2008 was the thing. What’s interesting is that people that have been doing real estate for the last decades think that real estate cycles are all up. Most things have gone up since we had that drawdown in ’08 to ’10. Things do cycle. I’ve only been through many years of this. What I liked is to hang out with people that are much greater and balder than me that have been through 4 or 5 cycles that are 60 or 70 years old. Most of the money that’s managed on Wall Street is being managed by the 20s and 30s. This is a big problem. People don’t understand cycles. They think that things keep going up. In real estate, that’s the same thing.

It was 2008, ’09 and ’10 when I had that big loss and when you have that loss, you tend not to want to look at, talk about or say real estate for many years because it hurts so bad. The thing you learn there is that mistakes don’t kill you. You also realize that you’ve got to be more of a pessimistic investor. Here’s what I mean by that. Every deal is a bad deal until it proves itself otherwise.

What people are looking at is, “These deals are great because the numbers are great.” They don’t look at the one thing that matters more than anything. The secret to a great deal is the operator and that is the thing that you should be vetting more than anything. If you’re the operator, you should be vetting yourself. If you’re new, you need people with experience. If you’re an idiot, you need somebody that has intelligence.

You’ve got to have the right team. I see so many people throwing their money around because the numbers look good. You can make any numbers look good. Any spreadsheet can be massaged to where the numbers look amazing. All of a sudden, your greed glands go crazy. People get emotional about their investing.

If you want to get emotional, get a dog that you love or jump out of a plane to get the adrenaline but don’t do it in the investing. That’s where you’re going to get killed because the excitement will be taken advantage of by charlatans and snake oil salespeople. That’s what happens every day and unfortunately, it’s getting worse.

Mistakes don't kill you. They make you stronger. Most people are so afraid of making a mistake and feeling stupid or being judged that they never grow. Click To Tweet

When you talk about unscrupulousness in businesses, it doesn’t start with somebody wanting to rip people off. It starts small. Adjust some numbers and the next thing you know, it gets worse and snowballs from there. Some measures that could alleviate the amount of risk, particularly for newer or seasoned operators, are preferred returns, which I love. The investors at least have that base that they’re going to be okay with. As long as there are preferred returns, make sure that the deal they’re presenting to their investors hits those minimum preferred returns. I wanted to touch on that briefly.

Something interesting about preferred returns is they’re great as long as there’s cashflow. If you don’t have cashflow, the preferred return doesn’t matter at all. You want to make sure that you’ve got something structured. I see deals that are showing up where they’re front-loaded with tons of fees. You have a preferred return.

What happens if the deal goes bad? The general partner is making all this money and the limited partners have to wait. I’m in the middle of helping to fix one where the preferred return hasn’t been paid in a couple of years because there wasn’t enough money. You still have to pay the partners. If the partners aren’t getting paid, they’re going to bail.

They’re not going to work for free. People like to say that they’re going to work for free but the reality is you still have to feed yourself and get exhausted from a deal. Profit can be useful. We’ve put five deals that we don’t have profit. There is value to it. It’s not the end all be all. Some people think, “I’ve got profit,” and that’s everything. It still starts with the people. You got to make sure that people are going to operate this thing into profitability.

It’s cumulative and compounding preferred returns. I don’t know about compounded but cumulative would be very important.

Damion, we were watching a video on YouTube of you explaining The Financial Freedom Formula – Your Wealth RUNWAY. Could you explain this concept to us? In theory, please explain it.

There’s this idea that I learned and started to think about from Buckminster Fuller, who was probably the smartest person in the 20th Century, maybe ever. Einstein said, “This guy was smarter than me.” If Einstein says it, that probably says something. He says the formula for how wealthy you are is how many days you can survive based on your resources.

If you think about that, all of us have a certain burn rate. We have a runway. How much does it cost us to live baseline? Maybe that’s $5,000 per month. If you have $10,000 in your checking account or brokerage account, you have 2 months of wealth. That’s how wealthy you are. Let’s say your cashflow is $2,000 per month and you’ve got some cash.

That cashflow helps alleviate the pressure of your expenses. You only have $3,000 that you’re burning per month. Most people have less than a year of wealth. You think about that and go, “How do I fix that?” It’s about creating the cashflow that overruns and exceeds your expenses, which is not complicated in theory. You have to think about that.

 

The goal though is to multiply that. If you’re spending $5,000 and you say, “I’m going to go build $5,000 worth of passive cashflow,” that’s cool. If you think you’re free because you have $5,000 of passive cashflow, what happens when something stalls for a month and all of a sudden, you’re going backwards? The idea for everybody is to figure out how to create investments or be a part of investments where you double or triple your expenses.

That’s because things don’t go perfectly. This is the real world, not school, where you have to get a 90% to get an A and 50% to fail. The reality is we have cycles and recessions. Things go sideways. The idea with the freedom formula is to get past the point where you have to be nervous, might run out of money or not going to be able to pay. You don’t want to be going backwards.

That’s the scariest for people running into a lot of people that have money. They say, “I’m going to take a sabbatical.” They’ve got their $200,000 or $300,000. They spend a couple of months watching that number go down. It freaks them out. When we’re going backwards, we tend to go into a state of panic and anxiety. Finding the strategy, over the next years, however long it takes, move past your expenses by a factor of 2 or 3. It does take the stress off.

My good buddies said that the purpose of life is finding your purpose. His grandmother said, “Retire as early as you can so that you can spend the rest of your life finding your purpose.” You can’t retire if you don’t have passive income. I don’t care how many millions of dollars you have in the bank. You’re going to look at those things and they’re going to be shrinking every year. You’re going to freak out and go back to work. You don’t have your time anymore. You’ve lost your freedom. It’s important to figure out how to build that type of asset that’s producing cash and paying for you instead of you going out there and trading your time for money.

Let’s say the example you use was $4,000 of income. Is there a sweet spot between having savings and also having passive income cashflow? What does that look like? Let’s say someone makes $4,000 a month from their job. Should they have $400,000 in savings? How much should the cashflow be? What is the perfect balance there? Is the goal to go 100% passive income? What would be the perfect formula from Damion Lupo’s formula for that?

What’s interesting is you hear a lot of financial gurus out there and people teaching about money. They’ll say that if you have cash, that’s stupid. You should be using it. If you have a house that’s paid off, that’s stupid. You should be leveraging it. They’re stupid for saying that because they’re not looking at the emotional consequences. Rich people have debt on investments but don’t have on their homes. You don’t see it. Nobody’s that dumb.

It’s a tool we use when we’re trying to build something. When you’re maintaining wealth and you want sanity, it’s called getting rid of the debt on the stuff that you’re staring at at night. In terms of cash, one of the things that I love people doing and I see this a lot is there’s something weirdly magical. This is based on 2022 about having $100,000 in the bank. People would say, “That’s a lot of money sitting dead.” It’s getting inflated away.

There’s also something about not waking up going, “I’m only at $15,000 and I might have to go to 0,” and you start panicking. Let’s assume you’re spending $5,000 a month. It’s a couple of times what you spend a year having that in the bank. There is a calming effect to doing that. It allows you to spend your time connecting with people and creating whatever you’re going to create. You’re not stressed.

If you’re stressed, you’re in a low state of energy. It doesn’t allow you to show up the best you can. I’ve seen this over the years with myself and other people. When cash is small and debt is high, the stress creates the monster version of you. When you take the debt away and you have the cash, there is something that allows you to show up in the most authentic way possible and create the biggest possible impact.

Every deal is a bad deal until it proves itself otherwise. Click To Tweet

You differentiated a primary residence debt and other investment debts. I connect with you there 100%. Unfortunately, here in Vancouver and Toronto, larger cities in Canada, most people’s main investment is their primary residence because the medium income is $90,000 and the median home price is $1.2 million. It’s pretty hard to get approved for that. When they do, that becomes their main nest egg. That’s what you go to borrow against to make investments. There’s an actual process for that. There is a whole ecosystem that teaches how to leverage against your primary residence to pick loans and make investments. We won’t get into that. We’ll go through our next topic here.

Let’s discuss this very confusing topic. In life, when someone needs something, the best way to remedy that need is to seek professional help. If your tooth hurts, you go see a dentist. If your roof leaks, you call a roofer. If your car breaks down, you go see a mechanic, on and on. This is where it gets weird. When you need help with finances and grow your wealth, the common sense is to go see a financial advisor. Why is it that by the account of many financial experts, including yourself and many others I’ve spoken to and read about, financial advisors are not the only answer but, at times, are the wrong man for the job? Talk to us about this concept because it is a bit weird.

Here’s the craziest part. A financial advisor is a lie to start with. When we talk about a financial advisor, we’re talking about somebody that sells financial products. We’re not talking about somebody that is a holistic financial support system for your life. That’s a big difference. A financial advisor should not be giving advice. I say that with all sincerity. What they’re trained to do is sell their products.

When people come to me and say, “Can you help me? Can you provide some advice,” I provide a lot of questions. People have their answers. If they’re led down the path with questions, they’ll say, “Okay.” Ultimately, we are our gurus. There was a Netflix documentary that Tony Robbins did and it said, “I am not your guru.”

Tony is smart and has the ability to trigger things and open you up with questions. Financial advisers had to rename themselves and call themselves what they are. In the United States, we have the Defense Department. It’s not the Defense Department. It used to be authentic. It was called the War Department. We call it the Defense Department but it’s a war-making department. Financial advisors are financial salespeople. If we honestly said what they were, we would have a different conversation.

People get confused and go, “My financial advisor said this.” I’m like, “What are they doing? They’re trying to sell you stuff.” Not all of them are like that but 90% of them do that. Everybody seems to think that they’re a financial advisor. Watch what happens when you pull your money out of the financial advisors’ pockets. They are no longer your friend. You’re like, “I go to church with them. My kids play Tee-ball with them and they won’t talk to me. They told me to go piss off.”

All of a sudden, it makes you like, “Maybe they’re not my friend.” They’re not your friend. They’re your friends with your money. That’s the reality of the system. There’s a great book called Thinking for a Change that I read years ago. You have to have different thinking around things. You can’t be Pollyanna and think everything is great and be Mrs. Optimistic.

I did that for years. I had a train drive over me because I didn’t have any pragmatic, pessimistic or practical thinking around cycles or the fact that people were going to abuse me. The world is a tough place. Financial advisors are there to make money for themselves and their companies. When you happen to make money, that’s an accident.

They’ll say it in their heart but what are they going to do? Are they going to tell you to go buy real estate when they can’t make a commission? No. If they do, it’s going to be like, “Maybe 5% because that’s risky.” It’s a bunch of crap. It’s not honest. I have a hard time with this idea of financial advisors. They’re not worth anything. They’re there to take money from you and trap it for the rest of your life.

REID Damion | Financial Literacy

Financial Literacy: Most people have less than a year of wealth. It’s about creating the cash flow that overruns and exceeds your expenses.

 

Damion, I’ve talked to many financial advisors. I’m trying to tell them about this incredible investment that we can provide to investors. The first thing they say is, “I’m not interested. I can’t sell that to my clients because it’s not on our shelf.” It’s very disappointing because I’m like, “I’m trying to make a snowball effect here where I can help a lot of people,” but they brush it off. I get what you’re saying. I can relate to that.

It was probably one of the best descriptions I’ve ever heard about financial advisors because it’s something unusual. We researched this a lot as somebody who’s supposed to be an expert in their field but can’t give you the best advice. On top of that, they’re restricted to the products they can sell and have somewhat of an agenda to push that product. It makes it very confusing as well. That’s why a market for us even exists. Smaller real estate private equity firms like us can bring in an offering that provides 8% pref and 15% to 20% annualized return. That’s why this marketing exists because they’re allowed us to be here. That’s a good thing.

I’m excited to dive into the next topic, Damion. I want to talk about IRAs. If you could explain what are IRAs? We’re located in Canada but most of our business is done in the US. Many of our investors and readers are Americans. For those who don’t know what an IRA is, if you could please explain and tell us again what is the issue with the conventional IRA is and what’s your answer to all of this?

IRAs, Individual Retirement Accounts, 401(k)s and all these different things are tax shelters. The US government in its wisdom, whether you believe that or not there is any wisdom there, Congress created rules to try to help people plan for their retirement. The government understands that there’s not enough wealth that the government has that can support people in their retirement. They need to have people doing it themselves. They set these things up in the ’70s, IRAs and 401(k)s so people would start putting money away for the future.

The Federal Reserve and the central banks go and steal it through inflation. It’s like, “Are we going backward here?” Retirement accounts are a tool that people have. If you go invest, typically, you’re going to be giving away your money. It’s going to be compounding against you because you’re going to lose 10% to 50% of it every year. In Canada, it’s probably even more if you’re not being smart about how you’re using structures and tax planning.

IRAs are the default step for people that are using a shelter. The problem with IRAs is they typically are pretty restrictive about what you can do. Even if you do a fully functioning self-directed IRA, there are consequences with taxes that most people don’t know about. They go invest in real estate. People get excited. They use their self-directed IRA to go invest in real estate and get a tax bill. An average IRA investor uses their money to go invest in syndication. They’ve got a preferred return and are all excited because they made 15% or 20%.

They take $100,000 and double it to $200,000. All of a sudden, they get a $25,000 tax bill in an IRA. They wonder, “How did this happen?” It’s because nobody told them. It’s all about the money. Custodians and these systems are meant to get the money and not tell you the whole truth. The other option, like what we spend our time doing, is setting up a different type of account. It’s under a different part of the tax code. There are different rules.

What we’re doing is we’re figuring out the best strategy. When I said taxes are optional, they are. You have to dig deeper and ask people harder questions. The challenge is you don’t know what questions to ask in the beginning. You’re like, “I don’t know which directions up.” How do you get around that? The question people should be doing is, “What do I do first?” The first thing you do is go around rich people, hang out with them, listen to them, start modeling them and find a mentor.

I’m going off on a tangent here because people start investing without having any knowledge. One of the easiest things you can do and the smartest things, almost nobody does, is to buy in somebody that’s already been through it. Show up and start making their life better by solving their problems. You’re going to become invaluable to them. One of the dumbest things you can do is go to that person and say, “What can I do to help you?”

Many people throw their money around because the numbers look good. You can make any number look good. Any spreadsheet can be massaged to where the numbers look amazing. Click To Tweet

I don’t have time to figure out what you can do to help me but I guarantee you that if you show up in my life and start doing things for me and supporting me, I’m going to say, “I want to keep you around. I’m going to spend time and energy.” I’m going to start mentoring or helping you. It’s a reciprocity law that Cialdini talks about in Influence. It’s also practical. I want people that are givers. I don’t want people that are takers.

When people say, “What can I give you?” I know what they want something so I go, “You’re trying to figure out how to take from me.” That’s what people should be doing. I know we started with IRAs. The point though for people is you got to go get around people. Peter Thiel in the US partners with Elon Musk in PayPal. He’s one of the biggest venture capitalists in the world. He has a $5 billion Roth IRA. Read his book, Zero to One, figure out what these people are thinking, what they’re doing, what their habits are and model them. I guarantee you. They’re going to be doing things differently than what The Wall Street Journal, CNBC or Jim Cramer says.

Is this a process you have in place? How does it work if somebody wants to contact you to structure their IRAs or investments the right way? What is the next step someone can take if they’re reading this?

When we look at retirement accounts, there’s a way to be tax-free permanently and it’s not through the IRA. What we do is the eQRP. We’re going to blow up the IRA. We’re going to transfer. It’s not a taxable event. There are no penalties or anything. We’re getting people out of the IRA so that they can have command and control of their assets. They can invest in real estate, crypto, gold and all these other things out there and not get taxed. The process of doing that is getting educated.

Here’s a funny thing. If you ever look at books and ask yourself, “Why would somebody write a book like that?” They want to share information because they want other people to be able to see it, not just the one-on-one conversations. It creates leverage for me. I write books because it allows me to clarify my thinking. If you think you know something, try writing a book about it. You realize how dumb you are. I’ve realized this a dozen times, “I’m dumb.” I got to figure it out. I got to go deeper and study what I already thought I knew. That’s what happens.

When you get a book out there that people will say, “I learned a lot from that,” you know you’ve accomplished something. It’s easy to have a book that you wrote. I see books where people will record their podcast, transcribe it and call that a book. I call that brain damage trying to read it. I would suggest that if you want to write a book, you better be willing to put a lot of energy and frustration into it. It’s like being pregnant with a blue whale. It will hurt sitting in you. You’re like, “Get this thing out.” Eventually, you have to get it out but you’re stuck.

The best process that we have for anything is the education process. We’re not here to sell something. What we’re here to do is to educate. People that want to buy it are going to buy it. That’s how we’d like to do business. When you’re investing, it should be the same way. You should be excited about going and doing the thing because somebody has educated you to the point where you’re like, “This makes complete sense.”

It’s not because they asked you the buying questions. You got tricked into doing it and they stole your credit card, which is, unfortunately, how a lot of marketing works. We have a different approach to educating people. The people that go, “I want to be responsible and financially free,” are naturally going to say, “I want to get rid of my IRA and have an eQRP. That’s what makes sense because I don’t want to pay taxes ever again.”

There’s a huge misconception about self-directed IRAs. I thought the whole point of it was to use your IRA money, put it into real estate, get the money back, put it back into your IRA and it’s tax-free.

REID Damion | Financial Literacy

Financial Literacy: Retire as early as you can so you can spend the rest of your life finding your purpose. And you can’t really retire if you don’t have passive income.

 

That was what people were told and what they did. A couple of things have changed. One, people are realizing if you invest in real estate, most real estate has debt. If you use an IRA for that, you’re going to have this big UBIT, Unrelated Business Income Tax. That is one of the biggest problems. We’re seeing people getting giant tax bills, hundreds of thousands of dollars because nobody told them this. That’s the first problem.

The second problem is that the US tax court made checkbook IRAs illegal. If you have a checkbook IRA and you’re investing directly, that’s illegal and disqualified. The court said, “You cannot have command of your assets.” What that means is physically holding the checkbook, the gold, the crypto or whatever it is, you cannot have command.

The custodian has to have oversight. That’s the entire point of custodians. That’s for IRAs. With an eQRP, you get to be the trustee and in charge. You’re in charge legally so the code says, “You have to choose it, pick it and be it. You can have possession and the checkbook.” It changes the game. You don’t have to get somebody’s permission or kiss the ring to go do a deal. You can write the check.

You can still invest in syndications if you wish.

That’s one of the great things too because there’s no UBIT. eQRP is exempt from UBIT. You go make $100,000 and it’s leveraged. You get to keep the whole $100,000 in profit. Whatever the profit is, you keep it. With IRAs, you’re going to waste 20% to 35% on the tax. When you start looking at all the options, you realize, “This is like a Ford versus a Ferrari. Why would I do the Ford?” They’re both cars and that’s where it ends. IRAs are a Ford. They have four wheels and you’ve got some options but that thing is going to break down and hammer you. You have to do your homework.

Unfortunately, people feel stressed and busy. They go, “I’ll take whatever is in front of me and whatever somebody is selling.” This is why I wrote the book to give people the actual information and show A versus B are not the same thing. This is an apple and this is a dog. It’s not apples and oranges. It’s an apple and a dog. Pick which one you want. Those are different things.

Let’s change the conversation here from all these deep dives into the financing and financial world. You’re an author of twelve books. You might be in the process of writing more. Talking about writing books, Ava coauthored a book. I was part of that process and I know how much it goes into co-authoring a book, let alone writing a book. I understand the process of what goes into it.

How do you manage all your time? We have a hard time managing building one company and you’ve managed several.

One of the things that are important for everybody to realize is you can’t save and manage time. You can spend time as you choose how you spend time. That’s how we think about managing. People oftentimes think about management differently. Time is something that you don’t get back. You have to start realizing the first thing you have to do best is say no. You have to be willing to say that. I call it the trust tax. It’s the tax that you pay on thinking you need to do everything yourself. What happens is you run out of time and don’t get things done. You spend a lot of time doing things that you shouldn’t be doing because somebody else can do those.

The function or the formula for how wealthy you are is how many days you can survive based on your resources. Click To Tweet

Your time is worth more in that specialized space. Napoleon Hill talked about specialized information and professional whatever you’re doing. There’s power in doing that and not doing anything else. Smart people want to do everything. We had one of our clients do some of these services. We did a service for about $300 for the year. This particular person was worth about $5 million. He wanted to do this service himself because he thought, “That’s not that hard.”

He did it and saved himself $300. I got a text message and he said, “I got a letter from the IRS. They say I owe them $60,000 because I did this form wrong.” I said, “You did the form. I wish you hadn’t. I told you we did it.” I didn’t beat him up too bad because the bill was the beating up of the deal. He thought it would be a good use of his time to spend a couple of hours doing this thing when the guy makes $1 million a year. This is how people manage their time. They waste time.

How do I manage my time? My primary goal is not to waste time. I don’t have conversations with people that are going to waste my time. I look at the things that I can hire other people to do and I hire them. Anything I can hire somebody to do is helpful for the economy and provides employment, which is what we need. That’s important.

I can focus on the things that are part of my purpose. I don’t think my purpose is mowing my lawn. That’s one of the dumbest things I can do. Some people are like, “That’s the only time I get away from my kids because they make me crazy. I need the quiet of the lawnmower so that I can have a break from all the chaos of my kids.” I’m like, “I get that.”

There are so many things that we do that are wasting time. We think, “I would have to pay somebody.” You’d have to think bigger. This is part of being small-minded and scarcity-minded. Instead of saying, “There’s so much abundance and I’m going to trust it.” If you don’t trust it, you tend to default back and your calendar is full of crap. My calendar is blocked out on purpose. I’m a lot more thoughtful about who gets access to me and how my time is spent because it is spent and it’s gone. You can’t get it back.

REID Damion Lupo | Financial Literacy

You have to ask yourself, what is that primary thing? How do you start that? Blank slate your calendar and your life. I call this the Blank Slate Principle. Take everything off the calendar and start from scratch. I do this with my house. I start when I move. I come into the house and go, “What do I want in here?” I don’t take all my crap from the previous house and dump it in my new house. I start off going, “What do I want?” When I pull in the things that I want, whatever’s left gets donated.

It’s the same thing with my calendar. Every year, I blast out all my meetings. I cut them off my calendar. My calendar is blank. I say, “What do I want?” The first thing I want to do is make sure that I have as few meetings as possible. Any default meetings, I don’t even show up. Somebody has to prove to me why it’s important for the meeting to happen. I’m not going to have it every week because somebody wants to connect. That’s not a good enough reason.

You can do this with your food. Take everything out of your kitchen and go, “What are the things that make sense,” versus the crap that’s six years old that’s rotting in your cupboard?” It’s the same principle. You start blank slate and own your entire 168 hours every week. If you don’t do that, you’re like, “I got to find time for this thing.” You don’t. You got the same 24 hours that Bill Gates or Oprah Winfrey have if you started with what matters but we tend to start with whatever has been defaulting from the legacy crap from our life last year.

Damion, what advice do you have for a passive investor looking to start investing in real estate private equity?

REID Damion | Financial Literacy

Financial Literacy: When cash is small, and debt is high, the stress creates the monster version of you. When you take the debt away, and you have the cash, you show up in the most authentic way possible and create the biggest possible impact.

 

Don’t be passive. That doesn’t make any sense for the passive investor. Here’s what I mean by that. If you say, “I’m going to be a passive investor and hand my money over,” you’re not going to learn anything. My suggestion for a passive investor is to be engaged. Find a way to learn through your money. Make your money teach you. Go do something and say, “I want to be a part of this.”

Go find people that are doing deals where you can be behind the curtains. In the deals that we’ve done over the years, my partner and I, people will say, “I want to invest and want to learn.” “Great. We’ll bring you behind the curtain.” You can see the stuff that’s going on. In that way, you’ll develop confidence. It’ll help you understand how to be a better passive investor.

If you think that having a high return is how you’re a good investor and you’re like, “I made 27%. I’m good,” you’re not. You just got lucky. How do you know how to do that again? Unless you understand the mechanics of the deal, you understand how to do a deal better because of the previous deal. How do you be a great passive investor? Don’t be passive. Be active.

Many of the guests have been on our show but this is one of my favorite episodes that we’ve ever done before. Let’s get into the next segment of the show.

The Ten Championship Rounds to Financial Freedom. I want to get started. Whatever comes top of mind, Damion, here we go. First question, who is the most influential person in your life?

Here’s the way to answer that. Some people inspire you and warn you. The person that had the biggest impact is probably my dad. As much as I loved him before he passed away and I still love him, he was a great warning to me. He didn’t live his life on offense. He lived it on defense. He was constantly trying to figure out how to protect himself and what he did was he didn’t live so he died with regret.

One of the greatest gifts I ever got right before he died was when he said, “There were so many things that I wanted to do and I’m out of time.” That was me learning a priceless lesson there that I’m not going to have this life forever. It’s time to take action and live. That’s a lesson for all of us. That regret is the ultimate hell.

Damion, what is the number one book you’d recommend?

Other than my twelve, they are what they are, I love Mastery. This is not Robert Green’s book, which I’m sure it’s very good. It’s by George Leonard. He’s a fellow martial artist. The point of Mastery in martial arts or anything is to go deep. Malcolm Gladwell talked about this in Outliers and the 10,000-hour principle where you do something for 10,000 hours. You start to develop mastery.

The freedom formula is not about a pile of money. It's not about how much money you have in the bank; it's about how much experience and wisdom you have. Click To Tweet

With martial arts, I spend about 20,000 hours training. It’s not that you get to a place where you’re a master. It’s the process of mastery where you’re willing to go into a plateau state where something seems like it’s the same thing for 1 year or 2 and you pop out of it. The point of mastery is it develops you and you’re able to be focused. If you don’t focus on something and don’t pursue mastery, you’re going to find that your life is about you chasing shiny nuts like a drunk squirrel. It’s unfortunate but social media helps people become very drunk squirrels all the time because there are unlimited shiny nuts.

Next question, if you had the opportunity to travel back in time, what advice would you give your younger self?

Enjoy your hair because it’s cold when you’re bald and fall fail faster. We are so conditioned to not make mistakes. The reality is nobody gives a crap. People are so focused on their stuff. If you’ve ever walked down the street, tripped over something and you’re stumbling around, what do you do? You look around like, “Did anybody see that? Are they laughing at me?” We’re constantly concerned about judgment.

Unfortunately, this is where you see a lot of younger girls that are online with all the bullying. They’re so concerned. Their image, judgment and confidence are such a big deal. I would tell myself nobody gives a crap truly. I had a mentor that said to me one time, “You have no idea how powerful you will be in your life until you get to the point where you don’t care what anybody thinks.”

I’m excited about this one. Damion, what is the best investment you’ve ever made?

It’s the personal development work that I’ve done on myself, including the almost two years of work with Frank that I did. He’s a therapist and a fellow martial artist I trained with. We spent two years asking one question, “What is true?” That led to Reinvented Life, the book I wrote in 2012. That work is the best investment. People say, “Where should I put my money?” I say, “You’ll never have a better return than the money you put in yourself.” They say, “Yeah, but which thing? Is it real estate? Is it Bitcoin?” I go, “You’re missing the point.”

Do you know what they’re doing? They’re trying to hack it and Tim Ferriss themselves. I love The 4-Hour Workweek but there is no four-hour personal development. It takes years, a commitment, time and money. That’s where the money should go first. Somebody says, “I have $10,000. What do I do?” I go, “Go buy all the courses and then do the work. Don’t buy the courses and put them on your shelf. Go do the courses, activate them and be active. Don’t be passive.” That’s where you get the best returns 100% of the time.

What’s the worst investment you’ve ever made? What lesson did you learn from it?

I invested in a restaurant. I used to go to this restaurant and they shut down. I happened to love the muffins. I went in there and was like, “I love all these amazing muffins.” When the restaurant closed down, I ended up buying the owner’s son’s house. I found the owner in the house and said, “Where’s the restaurant? I missed the muffins.” She said, “I’m looking for money to reopen it.” I said, “I would love to help.” Somehow a year later, I ended up being in the middle of a restaurant and it happened to be 2008. In that process, I ended up spending $100,000 on a half-built restaurant and never got those muffins. It’s sad because those muffins are good.

REID Damion | Financial Literacy

Thinking for a Change: 11 Ways Highly Successful People Approach Life andWork

How much would you need in the bank to retire now? What’s your number?

Money in the bank is never going to allow somebody to retire. You’ve got to have intelligence because you’ll always be afraid that it’s going to disappear. The Mystical asked Henry Ford that and they said, “What happens if you lose all your money? You’re rich.” He goes, “I would have it back in five years.” That’s the thing about having money in the bank or people that have retirement accounts. They wake up at 55 or 60 years old and they’re scared to death. They have $2 million or $5 million in the bank.

I run into people all the time and have the same conversation. They’re afraid that they’re going to run out and don’t have time to recreate it because they don’t know how they did recreate it. They create it by accident. That’s how most people are. It’s not about how much money you have in the bank. It’s about how much experience and wisdom you have that’s in between your ears. That’s the number. It’s the volume of that power and confidence.

When you have the confidence, take all the money. If I lose all my money, I will have it all back and more in five years. I’ve done it over and over again. I’m not concerned about it. I don’t try to lose my money. I don’t hate my money. I like my money. We have a relationship. It’s a little bit of a love affair. Do you want to date me? You got to date my money too. There’s a thing. The formula is not about a pile of money in the bank and there is no number.

I remember making $1 million, $2 million and having $5 million but I was never done. Money is an illusion and a shadow. It’s never going to be enough. You’re never going to be fulfilled or content. What I would suggest is that there’s a minimum amount you should have in liquidity that will make you so that you’re not thinking about whether or not you’re going to have money to pay for your gas tomorrow or whatever it is you’re using to live. It’s more about the experience.

When you think about how much money you need to invest, you don’t need money to invest. This had to do with people having houses at $1.2 million and they make $90,000 and then they borrow money out of their house. I go, “Why’d you do that?” People are like, “It’s an asset. I’ve got this money available. I can borrow. They tell me I can.” “Who told you?” “The person that gets the fees off selling me the mortgage.”

I get this. A better idea is the heart idea and it’s lazy to make money. It’s hard to go use your brain. People that are lazy use their cash. One of the challenges is to have for people reading is to figure out how to do deals without money. Use other people’s money and your brain. It’s hard and unlimited. That’s where you go exponential. That’s where you can become financially free in a matter of years, not decades.

If you could have dinner with someone dead or alive, who would it be?

I would love to meet my grandfather, either one of them or any of them. It would help me understand what is wrong with my dad. “How did this happen,” is my question. One of the things we forget is that people are not going to last forever. I never had a chance because they all died either before I was born or right after I was born. I have a lot of people in my 40s that are losing parents. What I love is people that are in their 20s that have parents that are probably going to be around for 20, 30 or 40 more years.

REID Damion | Financial Literacy

Financial Literacy: Congress created rules to try to help people plan for their retirement because the government understands that there’s not enough wealth that can support people in their retirement.

 

I focus a lot of time and energy on encouraging them to engage in those relationships because they do go away. It would be nice even having one conversation with the people that are gone. It helps us to understand ourselves better. I don’t care if I ever talked to Abraham Lincoln or Genghis Khan. I would like to know where I came from. That’d be nice.

If you weren’t doing what you’re doing now, what would you be doing now?

If I wasn’t doing what I was doing now, I’d probably be thinking about what I’m doing now and wondering why I’m not doing it. The mission that I have is to break people’s financial shackles. It doesn’t matter whether it’s retirement accounts or financial education. Something is compelling about doing work that serves others. One of the things I see when people are out there trying to make money, what they’re missing is that should be the side effect.

Making money is nobody’s purpose. Making money is an offshoot of the impact you have on the world and people’s lives. The more you do that, the more this money is a 90-degree effect from that and people miss that. They constantly think of their money bees instead of being honeybees. Go focus on the honey, the money follows.

I would be finding a way to serve people. I wake up every day and fall asleep in the middle of doing it. It happens seven days a week because I’m obsessed. I used to be obsessed with money. “I’ve got to get another dollar and figure out who’s got my money.” I love a lot of Grant Cardone’s books but I don’t follow this idea that I go into a room and figure out who’s got my money. I had one of those bumper stickers until I threw it away because it was the stupidest thing I’ve ever heard of. That’s a success. I believe in fulfillment. Fulfillment comes from service. Success comes from taking.

Quickly to add to that, to create a successful business, you want to solve a problem. By solving that problem, money becomes a by-product of it. That’s something that I’m not sure if I took from somewhere or learned over the years but that’s another way of saying it.

REID Damion Lupo | Financial Literacy

Damion, book smarts or street smarts?

Street smarts will not only keep you alive but allow you to prosper in a relationship. A relationship is where everything happens. Book smarts will get you a government job and you get to be a manager. You can learn everything you need to learn in the streets if you’re willing to go take a step into the wild. I’m not dumb. I’m not going to pretend to be dumb. Some people pretend to be dumb and it’s a technique. I don’t think that’s necessarily a great thing. I also know that there’s way more than I don’t know. I’m constantly out in real-world learning. There’s no greater teacher than the real world. A book will never teach you as much as the streets, the trenches and where you bleed.

That’s the thing but it’s dangerous. That’s why people don’t do it. They’d rather sit behind a book. That’s why people stay in college or uni forever. They never want to leave. They go home safe. It’s all perfectly choreographed here. I laugh like, “You stay there in your little illusion behind or the Oz where things aren’t real.” It’s hard, painful, bloody and muddy in the real world. That’s where all the growth happens.

Every human being has 6 primary needs and 1 of those is growth. If you’re in school, there’s only so much that you’re going to grow from reading books. When I hear somebody that has advanced degrees and quoting all these different philosophers and things, I’m like, “Yeah, but you’ve never been in the real world. Do you feel fulfilled?” I’m almost embarrassed and feel sorry for them.

Damion, this is the last question. If you had $1 million cash and made one investment now, what would it be?

I’d hire more people, which is what I do. I have a game I play with myself. It’s in a book that I have called My Life Book. This life book has all the different categories of my life. I built another category. It’s called The Game I Play with Money. It starts at $1,000 and 10X it. I know exactly what I’ll do with these different piles. If an extra $1,000 happens to come in, I know what I’m going to do with it already. I’m not repelling it. I have a plan for it. An extra $1 million shows up. These things happen because I have a plan. Respect people that have respect for it.

$1 million to me is a way for me to bring in more right people into my culture. It allows us to serve more people because people are the ultimate weapon. People think the software is where it’s at and I get it. Software is eating up everything. Marc Andreessen said, “Software is eating the world.” That’s true. There’s no competition when you have the human touch. There is a ton of competition in automation and you’re never going to be as good as Microsoft, Amazon or the next big, massive trillion-dollar organization that uses tech.

What you can do is you can dominate everybody else if you focus on the relationships which are based on humans. I’m always trying to figure out where I can find awesome people and open space. When an awesome person comes in, I’m going to figure out how to have them be a part of the culture. That’s where I put the money. You put it into human capital first and foremost.

I love this episode.

You dropped some gold there. I appreciate you taking the time and coming on, Damion. Your reputation preceded you but it’s a fact. I loved having you on.

Let everybody know the best way people can reach you.

You can find me through Financial Underdogs. That’s the best way to get and learn more. There’s stuff you can learn about with retirement space. If you Google me, you’ll end up finding it. I say that tongue in cheek because I beat up on Google a lot with what they do. The place where I live, share and continue this experience of giving and living my purpose is on Financial Underdogs. It’s where I can speak to everyone and share the best of who I am in an ongoing way. Reach out to me and listen to Financial Underdogs. There’s going to be more coming.

Thanks so much for being here, Damion.

I appreciate you having me, guys.

 

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