Improve Your Cashflow with Chris Miles - 41

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Today, I have an awesome guest with me. I have Mr. Chris Miles from moneyripples.com. And I am bringing him on because I've learned a lot from him in the past from his audio course and his podcast about how to actually get more money out of what we already get. Right? So, you know, if you read the book of "The Richest Man of Babylon", the idea is to pay yourself first.

Well, Chris goes much farther and much deeper into that. And he's all about cash flow. I would say that he is a finance advisor without being a financial planner type of thing. So, he's not gonna tell you what socks to put your money in or what mutual funds to put your money in. But he will actually help you keep more of your money by finding ways to save it, by finding ways to save on your taxes, by giving you ideas that up 'til now have been privileged of the rich. You know? Because the rich, they're not afraid of loop holes. They know all the loop holes because they can afford to pay for advisors.

Chris is the advisor to the every man. Is that right, Chris? Is that a fair portrayal?

Chris Miles: Yeah. I would say I'm kind of like an anti-financial advisor, if anything. I'm an absolute mutual fund hater. You know? I believe that if everybody's gonna invest in anything, they're gonna invest in things that they could control and do themselves, which is what you're teaching.

Resources:

http://moneyripples.com/

 

Podcast Transcript

Allen: Hey there, Option Nation! How you doing today? This is Allen back with another interesting episode.

Today, I have an awesome guest with me. I have Mr. Chris Miles from moneyripple.com. And I am bringing him on because I've learned a lot from him in the past from his audio course and his podcast about how to actually get more money out of what we already get. Right? So, you know, if you read the book of "The Richest Man of Babylon", the idea is to pay yourself first.

Well, Chris goes much farther and much deeper into that. And he's all about cash flow. I would say that he is a finance advisor without being a financial planner type of thing. So, he's not gonna tell you what socks to put your money in or what mutual funds to put your money in. But he will actually help you keep more of your money by finding ways to save it, by finding ways to save on your taxes, by giving you ideas that up 'til now have been privileged of the rich. You know? Because the rich, they're not afraid of loop holes. They know all the loop holes because they can afford to pay for advisors.

Chris is the advisor to the every man. Is that right, Chris? Is that a fair portrayal?

Chris Miles: Yeah. I would say I'm kind of like an anti-financial advisor, if anything. I'm an absolute mutual fund hater. You know? I believe that if everybody's gonna invest in anything, they're gonna invest in things that they could control and do themselves, which is what you're teaching.

So yeah. I started out being the traditional financial advisor 17 years ago and I did that for four years. But, it didn't take me long to realize that even after decades of advice, people were still not any better off financially. They follow that, kind of, crappy advice.

And I learned with people that were like friends of mine, they were millionaires and things like that, they didn't believe that advice. They thought that advice was stupid about saving for the long haul and diversifying in all these different funds, which really isn't diversification. Right? It's just putting your money all in the same kind of asset class and just hoping and praying that you're in it for the long haul, however long that is. Even if you lose money, oh well. You're in the market so stay in for another 15 years and maybe you'll make your money back. All that kind of crap that you're told by financial advisors, right?

So, yeah. I left that about ... after four years of doing that, I left it, vowed to never do it again, was able to retire in 2006 when I was 28 years old. And then, of course, went through the recession. Actually went from millionaire to upside down millionaire, was in a million dollars of debt when that hit. Was able to dig back out of that without going through bankruptcy and was able to retire again about two years ago. This time with a lot more streams of income and a lot more safe guards in place to make sure that I keep it coming in.

Allen: I mean, I'm interested in knowing how you did that both times. How did you retire twice?

Chris Miles: Yeah, the first time was pretty accidental. You know? It was March of '06 that I went to a seminar that some of these guys put on. And they were talking about how financial advisors basically suck. And I was the only financial advisor in the room by the way.

But I couldn't deny the truth. I mean, when they said, "Hey, high risk create high returns. So if that's true, how is that 90 percent chance of losing create a 90 percent chance of winning? That's dumb. No, you want lowest risk possible, create the highest returns, right?" And things like that.

So, I've vowed never to teach about money again. I just basically said I'm gonna do mortgages. I'm gonna teach ballroom dancing at the local university. And so, I did! I was starting to do that but then I wanted to get to know more about what these guys knew. So, I started to learn more about what they did and one really rocked my world because there's people still coming to me asking me financial questions, even though I said, "Hey, I don't want to do that." But I was learning different strategies. I learned about leverage. Like, "Hey, could I use the equity from my house to create more returns?" And things like that.

In situations, the focus were on cash flow. That was one of the biggest shift in me was when it was it wasn't about how do you compound your interest and things like that. But how does this actually create real streams of income? Real cash flow?

I remember people were asking me questions and one of my friends said, "Hey, do you like doing mortgages?"

And I said, "You know, I like teaching them but I, seriously, hate doing paper work." I hate when I tell people, "Hey, I'll be like three or four weeks before we're ... we got approvals. We're done here. So hang tight." And then the next day, they're like calling me up saying, "Hey, are we closed yet?" They're calling all hours of the day. That was annoying for me.

So he said, "Well, why don't you find somebody who actually does like doing that?"

In a scarcity world like I was in as a financial advisor, 'cause financial advisors teach out of scarcity. It's always lack and never enough and all that kind of stuff. Well, I never thought about splitting commissions and things like that. When he said that, I was like, "Wow! I could do that." So, I found a guy that was really good at doing the paperwork, didn't mind doing the underwriting but wasn't a big marketing kind of guy. Good guy with integrity. So I just said, "Hey, if I basically spoon feed people to you to where they're ready to do it, I just need your help to do the paperwork. Would you split me in 50/50?"

And the guy's like, "Yeah, of course."

I'm like, "Sweet!"

And so, I would educate people for maybe half an hour to an hour max about ways they can leverage their mortgage and refinance and free up cash flow and stuff. They were like, "Great! Well, who do we go talk to?"

I'm like, "Go talk to this guy." And next thing you know like a month or so later, I get a check for like a thousand or fifteen hundred bucks. I'm like, "That's like a thousand dollars an hour! That's way better!" This is great!

And so, I started doing it with other companies. I even did it with a wholesale jeweler, getting paid five percent on any sale. And I was like, "Hey, these guys are like two, three times cheaper than the malls. Use these guys instead. They're great." Or,"There's other companies."

And between these four or five different companies, I was seriously making four, five grand a month passive income. Like, I was doing very little to get. I was only working a few hours a week to make that money. And that's when it hit me 'cause at that point, I mean this is 2006. I only had two kids at the time. So, it was like by July of '06, I'm like, "Dang! That was only four months after I quit being a financial advisor and I thought I have to work forever and save every little penny and be cheap until I was 40 to be able to retire." And here I am doing it four months later with no real money in the markets. Just purely because of referrals.

So that was the first way I did it. And then I started building it out of things like real estate income and things like that. By the way, at the same time, I was actually stock coaching and teach people how to trade stocks and options. So every money I was making from that was purely gravy. It was just like, "Well that's extra six grand or so a month. I can go and invest myself." I was having fun with it.

So anyway, this last time around though, to be able to hit that retirement nest, I decided to create very multiple streams of income. It's not just from referrals but I was doing it from like my podcast. Can I get paid for advertising and things like that? Could I get paid from certain affiliates? Or could I get paid from monthly programs I have for clients and things like that? Where it's more system based versus me, my own time and attention. Pretty soon, same thing. But this time it wasn't like four or five grand a month 'cause I've got eight kids now with a blended family.

Allen: Wow!

Chris Miles: So, three or four, five grand a month is nothing. For my family, I've got to make at least 15 to 20 grand a month minimum to even make ends meet. So,  that's why it took me until two years to go and do it again even after the whole nest the recession. But yeah, that's really what it was. Investments, business streams, things like that, I found multiple ways to do it and it's awesome. It's ... truly, the key to freedom is creating that cash flow.

Allen: So, how do you classify yourself? Like if someone, "Hey, what do you do?" What would you answer to that?

Chris Miles: Depends on who's talking to me. I mean, if it's a business owner, I'll say I'm the cash flow expert. But in most time, I just refer myself as the anti-financial advisor because I'm basically against everything financial advisors teach.

Allen: Okay. Alright.

So our audience is made up of individual investors with a slant towards selling options. So, we focus more on more passive strategies, covert calls, puts, eye condors, credit spreads sells, those kinds of things where we have the probabilities in our favor. We put them on and then we have the time to go do other things while the trades are working for us. And they're not to the point where we have to sit there all day long, monitor them by cell by cell, like a day trading kind of thing.

Chris Miles: Yeah.

Allen: So, a lot of our people are ... they are already investors so they already have some kind of amount of money to put in. But then we also have a bunch of people who are trying to get in. So they're still working a day job and they're still saving up money and they're still trying to get ... put together an amount of money so that they can go and open an account and start trading.

So for those type of people, could you give us a couple of hints of ways that they could generate more cash flow from what they already have?

Chris Miles: Yeah! Absolutely!

It kind of reminds me of a situation like I actually have one client right now where ... funny enough, he actually is kind of in a similar situation like yourself. He actually teaches people how to trade options. And he came to me, he says, "Okay Chris, I'm great at this." And his strategies more day trading than he does covert calls and things like that. But he's like you know, for myself personally, I love this and I make good money with this but I need other streams of income. Like, I just can't have this. Like this is a good active stream but I want some passive streams too that I don't have to work so hard for.

Allen: Mm-hmm (affirmative)-

Chris Miles: And so, I was like, "Okay cool." We'll see good stuff. And so we started looking at these like, "Do we do things with real estate?" Or how about oil and gas? I'll tell you like, it's especially if you work at another job, you get crapped on when it comes to taxes. It's horrible.

My business owner clients, they love it because we can do all kinds of things ... strategies to minimize taxes. But, using IRA's is a joke when it comes to ... 'cause you don't really save on tax with IRA's. You're just delaying the inevitable. Especially, right now where we have some of the best tax benefits right now. We're at some of the lowest taxes we've ever had in the last century. It's kind of tough to say, "Oh yeah, let's delay tax until later 'cause yeah, tax are gonna keep going down, right?" All that kind of stuff.

So people, most time when they come to me where they've had ... they make several hundred thousand a year at their job or they're doctors and things like that. They're looking for options to do. Definitely, options can be great, but a lot of times we would look for other things too of like, "Hey, can we do oil investments where we can write off everything that we're investing that year to bring your income down and stuff." And heck, you're like, "I want to get out of these stupid self-directed IRA's because they're telling me what I can and can't invest in."

Cool! Well, maybe we can do some things to offset that. Maybe we do like conservation easement strategy where we donate land and you can write off four times whatever you donate. And that offsets the penalties and taxes if you're not 59 and a half. Like things like that. That's kind of stuff that I usually run into with situations like this. It's ... the biggest thing is like how do we keep as much money as possible and how do we get the money working for us as much to generate that cash flow?

Allen: Mm-hmm (affirmative)-

Chris Miles: And yeah. I think it's fun.

Allen: Okay. I mean, yeah. It sounds like ... so one of our earlier episodes is, we call it ... I called it the five finger strategy where you have to have five different sources of income if you want to be truly, financially independent. Because when you're trading, if that's the only thing you're doing, if you're trading options or whatever. If that's the only thing you're doing, then you have that stress on the top of your head all the time. That I have to make enough to pay the bills. And it's not like where you're working a job where you go in and you know that you're gonna ... you're in the office, you're gonna get paid no matter what as long as the company is still in business.

So being a trader is kind of like a sales person or a real estate agent or something like that where you have make the money in order to get it. There's that pressure on you all the time. If you do diversify and you have other streams of income, whether it's real estate or whatever, you can ... it takes the pressure off of you. And then you actually trade better at the same ... in the same regard.

Chris Miles: Exactly! Yeah, and that's kind of like why that guy came to me too. He's like, "Okay, I'm rocking the options world but how can I get some pressure off of me?"

And even though from a business standpoint and I tell this to business owners all the time, even people that I'm like network marketing. Like, I'll get people network marketing. They're like, "Oh, I'm set for life 'cause I've got", they might have hundreds of thousands of people in their down line and they're making what they refer to as residual income. And I tell you, I've watched those same people lose their businesses, like lose everything. And I tell them like, "How powerful is it if you can work because you want to, not because you have to?" That you've got other streams coming in and you say, "Hey, I don't need to do any more business. I don't need to do this. I'm just doing this 'cause I think it's fun."

I think that the way investing should be. I think that's the way everything in our life should be is like, "Hey, I'm doing this because it's fun." And I'll tell you my experience, even with the people I had trained to do, trading with stocks and options, and any other type of investment, any time somebody said, "I think this is just fun. I don't care if I even make money. I think it's a bonus I make money." Whenever they say that, I'll tell you like when I follow them over the years, they just get better and better at that investment or in that business. They just ... things work out.

For some people, they're just doing it for the paycheck. It's like, "Well, how's that different than having a job?" That sucks. So, it's true. You want to have multiple streams of income. You want to take that pressure off yourself 'cause you never know. Things might change. You might have to make ... you have to call an audible. That's what happened to me. That's what I did wrong before the last recession is that I was kind of banking ... in fact, I cut off a lot of those strategies, a lot of those income streams right before the recession. 'Cause I remember I was coming out of retirement. I was starting to teach people how to gather a rat race. And I remember the guys I was working with, his partner said, "Hey, well we can't have you doing these other side activities. We need you focused here." So I'm like, "Alright. But to be a team player, quote on quote, and for the mission, alright, I'll cut off these streams of income", which was so dumb. It was idiotic to do that. And it got me from a place of freedom to a place of bondage.

Cash flow is really the key to freedom. 'Cause when you have more cash flow, there's more options. And when you have more options, that's when you have freedom.

Allen: Right.

Now, so you don't think that ... you've always just said that, "Hey, you hate financial planners." So you don't think that they have any value at all?

Chris Miles: No, not at all. In fact, I think most financial planners have a good heart. Their hearts in the right place. What's wrong with financial advice is that they've been sold a bill of goods. And they're taught to regurgitate it back to you. Think about it. A bank, if you look at the rules of a bank. What does a bank want you to do when you give them money? They want you put money as often as possible, give them as much as possible, keep in there as long as possible, take out as little as possible and then take all the risks yourself. I mean, that's basically what a bank will have you do.

Now, what are we taught to do with investing from the traditional point? They'll tell you, "Hey, put in money all the time, like every paycheck. Put it in all the time because you need that money going in. You need to start stuffing in lots of money and live on the interest." And they'll you, "Hey, put in as much as possible 'cause man, look how much it'll accelerate. And as long as possible, man that miracle of compound interest? Oh it's awesome." Like, "Imagine what your money will look like in 20,000 years!", "Seven percent off the S&P 500 index off the spider." That's after all the fees they've taken out by your financial advisors and stuff.

And then they're telling you, "Yeah, don't take any money out. Like you gotta live on less than an interest." And it always seem dumb to me. I was like, "Wait!" Most time you see right now, most is biased. They'll say don't take out more than two or three percent of your account." So if you're a millionaire, you've got a million bucks saved up in a 401K or an IRA, they're basically telling you to live below the poverty line at 20 or 30 thousand dollars a year. I mean how is that right? I think that's stupid.

So you have to, I mean really, I actually ran the numbers if someone wanted to retire in the next 20 years and you want to have a $60,000 dollar a year lifestyle which is not great. That's $5,000 a month. And you factor for inflation? Based on the current just typical mutual funds and stuff like the ones that are in the marketplace right now. You would have to save, I'm kidding you not, like adjust for inflation, everything, to pull out what they recommend pulling out, you gotta seriously save about $10,000 dollars a month for the next 20 years to be able to retire at a $60,000 dollar a year lifestyle. And that's just ridiculous.

So it's not that the financial advisors are trying to deceive you but they've been sold everything from banks and financial institutions that are teaching everybody was just supposedly the rules of money. But you've been teaching and what I've been teaching as well is that, no, we gotta throw this thing upside down on its head is that, "No, when we take the investments under our own control. We take less risk, not more. 'Cause the banks want you to take all the risk. That's why mutual funded companies like Fidelity and what not, they're not gonna tell you like, "Hey, we're gonna take some risks for you. If you lose money, we do too." It's like no. They take their guaranteed fees, no matter what. Whether you may get it, they're making money. They take no risk. You're the one that takes all the risk. And that's why you've been taught, "High risk creates higher return." 'Cause they want you to actually believe that you have to take all the risk. And that's just bull crap. You don't.

Allen: Yup. Yup.

So, in your ... like for your clients and what not, what type of financial products do you recommend?

Chris Miles: You know, it really depends. Everybody has their own recipe. I mentioned earlier, we talked about finding things that light you up. What are the investments that you're just like, "Wow, that'd be fun!" It could be ... if it's options trading? Sweet! Let's make that like your active investment. You're totally rocking it and building up your cash and everything possible to make more. Then outside of that, cool, maybe look for passive streams. And that could be in different aspects of real estate. It could be in oil and gas. It could be with different notes or funds. I know funds out there that'll pay you consistently 10 percent a year but paid out monthly. So, if you got $100,000 bucks, they'll pretty much pay you about $830 ... what was that? What is it? Like $830 somewhat dollars a month just on that. You don't have to do anything. You don't have to worry about it. You just let them take care of it. They're investing their own stuff.

Allen: So what type of funds are those?

Chris Miles: That one particular company, that one's one that invest in mortgage, like delinquent mortgages. And they help people refinance and so this is buy-out huge portfolios of mortgages from banks and then try to refinance people and keep them in their home or help them sell their home and split the equity and that kind of stuff.

Allen: Ah, I see.

Chris Miles: So, I mean, and like the one company I've referred people to, they're actually reports of the FCC every year. They're monitored by them. But they're own portfolio usually makes at least 39, 40, 50 percent a year. But they'll pay investors, people that basically loan money to them like 10 percent, paid out monthly.

Allen: Wow!

Chris Miles: Not huge. That's like, for me, that's the low-end of the return scale. I like higher. I mean I know other funds that might do 12 percent or more if you let it reinvest. Turn-key real estate. I have turn-key being hands off, you don't have to deal with anything but you get to collect the checks. I mean, some of those can easily do at least 10 or 12 percent a year. And that's just cash on cash. That's not including the tax benefits or appreciation or the fact that they're paying your mortgage down for you which could lead to easily 20, 30, 40 percent year over year cash on cash return.

Allen: So what would be an example of turn-key real estate?

Chris Miles: Yeah. I'll give you an example. Recently, I bought a property in Memphis, Tennessee. And I didn't have to find the property, I just used a turn-key provider that found the properties and said, "Here's a list. Which one do you like?"

I said, "Well, that one looks sweet. That one's paying 14 percent cash on cash right of return, so I'll take that one." Bob that, after interest rates kicked in a little bit when the interest rates climbed a little bit, it ended up being more like 11 percent cash on cash. So I basically put ... all of a sudden, I put about three grand down. But my cash flow was $270 bucks a month.

Allen: Mm-hmm (affirmative)-

Chris Miles: And then, the next are $120 bucks a month that's going towards paying down a mortgage. But that's like phantom income. That's like filling net worth and that becomes more important when I sell the property down the road.

But the cool thing is actually just recently, we just raised the rent on the renters another $55 bucks a month and they signed a one year lease again. So now it's the ROI's now jumping up. Now it's like $320 or so a month. Now, my ROI's like about 13, 14 percent.

Allen: Nice! How many of those do you have?

Chris Miles: Those ... I've got a few of those, actually. And then we got like things like multi-family. You could do things like fourplexes, you can even go bigger. 'Cause if you got a lot of cash, our thing is you drop them like 30 grand or 20 grand down as a down payment, you've got like $500,000 dollars. That's a lot of properties to buy. So better is you can go look the fourplex route, which you might put down like a $120 grand or something on. And make money off that.

In fact, I just had a deal recently that came across and I was already leveraged from my own money. But there was an offer that came across for a 55+ senior community where I can't remember how many units were in that deal. It was like $2.65 million dollars down payment. But the cash flow was already paid 'cause they were already in it. There was already people paying for it. There were already ... the cash flow was already $311,000 a year. So $2.65 million dollars down for $311,000 a year passive coming in. And the thing that was cool about that is they're still raising the rents. So, they're still trying to make more and more cash flow on that deal.

I actually ended up sending it out to my clients. I'm like, "Hey guys, maybe ..." I knew a few of them could do it by themselves but they probably weren't wanting to go on that big. So, I'm like, "Hey, partner up. This is an awesome deal! That's almost a 12 percent right of return from a big deal like this." I mean from that much cash, that's hard to do.

Allen: Yeah.

Chris Miles: That's not including any appreciation or anything else. That was just purely from the cash on cash returns, you know?

Allen: Uh-huh. Yup. It's just that, I think, for most people and I'm sure your clients included, it's ... unless you're really tapped in, it's really hard to find these type of investments. And then, it's hard to know if it's a good investment or not. Right?

Chris Miles: Exactly. And that's why you have to have the right relationships, the right connections and stuff. 'Cause, yeah, I didn't have to find those properties. They basically found me. That's what's beautiful about it is that there's an over-abundance of deals out there. That's why I tell people like, "Don't just do something 'cause they'll pay you a lot of money. Do something because it actually is exciting to you beyond the money." There's plenty of things you can do ... there's a million and millions of ways to make millions of dollars.

Allen: I'm sure you know that but there's so many people that'd be like, "Well I don't know any of them. I can't find any of them. Where do I find all these deals?"

Chris Miles: Well, you know and that's what I teach on my podcast show. The Chris Miles Money Show 'cause like recently, I had a really popular episode with a guy that he actually had him on my show, I think it was like, five years ago. Like early on. And he was talking about real estate and what not and it was cool. Well, I started to see in some of his emails and his emails started turning towards short-term rentals, like Air B&B rentals. And I had a few clients were like, "Hey Chris, what do you think about doing air B&B? What about buying a property and doing air B&B on it?", which I'm like, "That could be cool."

But this guy, he's like, "Hey, you know what? You don't even have to buy the property. What if you go to a building, like an apartment building and say, I know you got a ton of these units up for rent right now. How about I just rent all these from you. Let's say there's like six of them that are unrented. I'll just rent all these six units from you. I'm gonna sub-lease them to somebody else but don't worry, I'm gonna be doing all the cleaning. It's gonna get cleaned every week. We'll even clean the vents that you won't do, that your own tenants won't do. We'll keep this probably in better condition than any of your other tenants. And you're gonna get paid every single month. And you don't have any more vacancies.

And then you go and you just furnish the place and then you start collecting in like a couple of thousand bucks a month of passive income from the air B&B rentals. And you have your own team that's coming in and that's managing the property so you're not managing it yourself. I mean that kind of stuff is ... that episode right there when he's like, "yeah, you could drop ten grand and furnish a place and you end up making that money back within a year and a half. Then it's just like your cash flowing net at least a thousand bucks a month above and beyond your rent payment." He's like that's ... when you think about that. That's like a 50 percent rate year over year rate of return. That's pretty incredible.

More of an active investment? That's a thing about it. There's so many options out there you can do. It's just a matter of one, figuring out what lights you up. That's a lot of times when I have to discuss with people. It's like, "Alright, let's investigate some of these and see which ones you lean towards." Then, create a road map from there, a game plan to get you out of that rat race so you can quit that job or work because you want to, not 'cause you have to.

Allen: Okay. Now you also have ideas on how to help people with their taxes, right? How can they ... so like, if you were to give our audience some tips on ways that they can reduce some of their taxes?

Chris Miles: Yeah. It depends where you're coming from. If you're already a business owner, you've got lots of opportunities. Sadly, most accountants don't teach you that much what to do. For example, like this year, you're allowed to pay your kids $12,000 dollars a year ... your minor children $12,000 dollars a year tax-free.

So I remember I had a woman in California that she had six kids. And she was only paying them $6,000 a year. When she found this out, she started paying them $6,000 a year, saved her $13 grand a year in taxes. And the cool thing is she's still using that same money to pay for the same crap that she was paying for before; schooling, extra curriculars, all that kind of stuff. College savings, if they want to save for college or whatever. But that's like tax-free money.

So, if you can get yourself in the business owner status and if you're not there, say you're working for a company or whatever. Then, it's like, "Okay, can we get you to do professional investor status?" And that can be tough to do. There's things to do. It might not be you. You might have to get a spouse to do it depending on who works the least. You kinda have to work ... you have to usually work about an average of 15 hours a week to hit the professional investor status. But if you do, you can actually start claiming losses on your taxes. Making money there. There's things of that.

I mentioned a few of those things from the investment world. There's like the oil and gas. You invest a hundred grand in oil and gas this year, usually you can write off at least $85,000 of that. So if you're like, "Hey, I'm making $250,000 a year. I want to get down on the next tax bracket. Cool! Maybe you dump a hundred grand on oil and gas and get the tax write off this year. But then starting in the second year, you start getting cash flow from the investment. Possibly even a 200 or 300 percent rate of return after three to five years on the reposition and sell off their land shares that you're a part owner in and stuff. Or do you do that conservation easement strategy where you donate land, like I mentioned before. You write off four times the amount you donate. So if your land share is $50,000 bucks, you write off $200,000 dollars off your income tax. Things like that.

There's so many cool things you could do. It's just depending on where you're coming from. If you're ... the sad thing is if you're an employee, your options are pretty limited. It's pretty much either you get to that professional investor category or do a few of those types of strategies ... those investment strategies.

Allen: So now, let me go back. You said for the .. you can pay your kids if you have a business. And now, obviously, the kids have to do something in the business where you have to be able to say that they're providing some type of service. Then you also mentioned that you could pay them $12,000 this year. Now, I've heard of that and I'd do it with my children but we pay them six.

Chris Miles: Yeah. That's kind of like until this last year in 2018.

Allen: Okay.

Chris Miles: Yeah, it used to be $6,000 but then recently with the whole Trump tax plan, they said, "Hey, you can actually do twelve with your kids." It's also justifiable, you can't just pay them for doing nothing. You pay them like you pay any adult for. If it's cleaning or if it's helping you with marketing if you're in business and that kind of thing. Obviously, you gotta be a business owner of some sort. It could be filing. It could be computer work. Come on. You have them help you build a web page if they're better at that than other people, you can easily pay them at least twelve grand a year.

Allen: Exactly.

Chris Miles: All kinds of stuff. It just depends on your business, the nature of your business and what you can do. The challenge with me is I've got eight kids trying to figure out how to pay them all that much is pretty tough.

Allen: And this is only for this year or is it for until they change the tax code?

Chris Miles: Until they change it, yeah.

Allen: Okay. So there's no time period that says, "Okay, this will be enacted for the next three years," or something. And then it has-

Chris Miles: Not that I know of. But, like I said, in two years, we have a new president and new tax bill comes through and who knows? But yeah. In the meantime, we can definitely exploit that fact.

Allen: Wow. Yeah, okay.

Chris Miles: That's one strategy.

Another one that's pretty cool that a lot of accountants never teach because a lot of them just ... by the way, if you ever have an accountant that says, "Oh I'm conservative." What it really means is they're saying, "I'm ignorant." 'Cause they just don't know the tax laws. So they're conservatives 'cause they don't want to go and learn any new strategies. So they just tell you the same old crap.

Like for example, there's one and in fact, I had an accountant that told one of my clients, "You cannot do that. That's against tax code."

So I found freakin' articles, even in like New York Times and stuff for like this corporate rent strategy as an example. Where if he had a corporation, especially if you work from home, and heck even if you don't work from home. Maybe you just have a home office, you could actually pay to use your house say for one day ... one day's use. Almost like you would for a hotel. If you've ever booked a hotel, like a meeting space or something like that, whether you had people coming there or maybe you just meeting with a potential client or whatever it might be, you say, "Hey, alright, I'm gonna book this hotel meeting space. Yes, I'll pay for the wireless internet. Yes, I'll pay for this. Heck, why not pay for lunch too or catering." You start to add it all up, it's a lot of money for a day's use for a hotel.

Well, not too uncommon, you could pretty much see like a day's use of a hotel could be easily be at least ... for cross country, it's different state by state but cross country, like $1250 bucks let's just say for a day's use of a hotel. Well, you could do that same thing by renting your corporation, renting your house from you, personally, for that one day. Now, if you know about rental laws like you don't get tax on rent until it passes 14 days in that year.

So, let's just say you only pick one day out of the month that you do something. And it could be something with clients. It could be something not. It could be you're doing a planning meeting inside your own house or whatever. Whatever it might be, you basically use your home for that day's use of business purpose. Well, if you did that for 12 days a year, that's fifteen thousand bucks that you've been paid personally from your corporation. So that's a write off from your company. You're getting a company write off. But that income is income tax-free because you haven't surpassed the fourteen days.

So depending on your tax bracket, if you're in a pretty high tax bracket, that could save you at least five or six grand. In fact, I had ... I tested it once. So, I actually ... I had an accountant who forgot to count it and I said, "Hey, hey, go back. This thing right here, this expense, this income is actually should not be counted as income 'cause that was 11 or 12 days of those corporate rent payments." And so he put it back in, he's like, "Oh, let me adjust that." And seriously, it was a six grand savings that year.

Allen: Okay, so let me get this clear. If you have a property that you rent out and you  collect income, you collect rental income on that, whether it's a house or a car or whatever-

Chris Miles: This is actually for your own home you live in.

Allen: Right. Okay, so it's only for your home?

Chris Miles: Yep, just for your home. Not talking about the rental properties. This is just for your own house.

Allen: And if it doesn't exceed 14 days, there's no income tax on that?

Chris Miles: Correct. Yep.

And then, tax usually ... if you go over 14 days, it's passive income tax. You're taxed like you are for real estate but as long as you don't go over 14 days a year, that's income tax free to you.

Allen: Wow. I didn't know that one. Yeah.

Chris Miles: Yeah. It's pretty awesome.

I have actually, I have one friend. He has a bigger home and he's like, "Hey, my accountant has me justifying $1500 a month ... or $1500 for that day's use. So he's like, "I'm going all the way up to the 14 days." So he's basically writing off like 21 grand a year. That's saved him probably at least 7 grand in taxes that year.

And you're still getting paid. That's the cool thing. You're still paying yourself. But rather than paying yourself, you have to pay income tax and social security tax and everything else, you're taking that totally income tax free.

Allen: Hmm. And so how would you ... you have to still report it as income but the accountant should know how to handle that, right?

Chris Miles: Yeah. You have to let them know, of course, that that income is from however many days it were in that year for that rent payment. You just have to classify ... tell them that 'cause if you don't, then they will just count it as normal income.

But yeah. You just have ... and they can use ... if they know the strategy obviously, they'll see, "Oh, there's that rent payment coming out of your business and there's the income. Perfect."

Allen: Awesome. Cool! Yeah, so I think those two tips could save people a lot of money. But both of them, obviously, you have to have a corporation. And I think one of the ... couple of episodes ago, we talked with another one of our traders who had gone ahead and started trading inside of his corporation for an asset protection. That was the main reason, for asset protection, but then he also was able to take out all these expenses as deductions.

And then the losses were also classified as differently than on his personal. That helped out a lot as well.

Definitely, I think, it'd be good for most traders depending on how much they actually have and how much they could actually save. They could probably easily do this and open a corporation and just do all that stuff out of it. That's really cool! That's really cool stuff!

Chris Miles: Yeah.

Allen: Is there a way where people can get a hold of you? 'Cause we're out of time here but I know that we could keep talking and I'm sure you have lots of other strategies as well. But is there a way for our listeners to find you and get a hold of you?

Chris Miles: Yeah. Like I mentioned, you could check out the Chris Miles Money Show that's on iTunes or you could find it online that way. There's also my website, moneyripples.com. That's M-O-N-E-Y-R-I-P-P-L-E-S dot com. Even if you have questions specifically, you might just say, "Hey, let me send an email Chris." You can just send that email to Chris with a C-H. So, Chris@moneyripples.com.

Allen: Cool! Thank you. And before you go, I got one last question for you.

Chris Miles: Yeah.

Allen: So, let's say, you ran into somebody and you really wanted to impress them with your financial knowledge. Maybe this person is a big whale type person and you're like, "Okay, I want this guy as a client. I'm gonna give him one tip that's just gonna knock his socks off." What would that be?

Chris Miles: That's not an easy answer 'cause I always adapt to the person. For me, usually it's mostly listening. All I have to do is usually ask you a series of questions and just find out like where you are and usually, I'll find out something like, "Oh, hey, have you considered this?" So, it could be like conservation easement, like, "Hey, here's a way you can write off four times and get massive savings if taxes are a big pain." Or "Hey, passive income, you want more of that? Dude you can totally rock your world by making passive income over here and doing this kind of stuff."

It's not hard for me. It really just depends on the situation where they're at. I would say, probably for me, to knock their socks off, I usually do less. I usually do less talking, more listening.

Allen: Mm-hmm (affirmative)-

Okay. Alright.

Alright, Chris! Well this has been an interesting conversation. Those of you who are looking for more passive streams of income, that are looking to save money on their taxes even, do reach out to Chris.

Like you said, there are lots and lots of ways to make money. We just have to find them. So, appreciate it, Chris! Thank you for spending some time with us.

Chris Miles: It's an honor. Thanks for having me on your show.

Allen: Alright, take care.

Chris Miles: Alright, see ya.

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