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Exploring the Financial Industry with Garrett Gunderson

In this episode, we're talking with Garrett Gunderson. I was incredibly challenged with Garrett. He's in a topic that I'm personally growing in myself, money, finance and what's coming up.

What I found interesting about this episode is Garrett has very strong passion about what he’s sharing and a very strong point of view. I love that. What was also interesting that you're going to discover in this particular episode is that Garrett comes from a coal mining town. He doesn't come from a great upbringing in the financial world.

I always thought that was incredibly hard to break into and achieve the level of success that he's done, not to say that you can't go from essentially nothing into something but especially in the financial arena. 

In this episode, you're going to discover that Garrett advocates investing in things that you are passionate about. I know you're constantly exposed to ideas here at WealthFit, "Go do this or maybe you should do this and do that." It doesn't mean you have to do all of them. That's something that I tried to subscribe to back in the day and I went nuts with it. Find the one that resonates with you and you'll discover Garrett’s big mistake in investing in something that he wasn't all that passionate about and that hurt him. Also, in the way that it hurt them and helped them grow.

He's incredibly successful doing what he's doing. If you want a fast-paced, interesting episode when it comes to money, what's coming up, how the markets are performing, then you're going to absolutely love it. A lot of people let fear dictate their life but run their life and not knowingly. 

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Dustin
We're in the greed cycle because things have been good for a long time, but all indicators and the people I would listen to, it's inevitable that it has to turn. First off, fewer people can qualify for the loans of the housing prices and we're in a place where people buy based upon the payment, not based upon the purchase price. If interest rates go up, that's going to have an impact on real estate. If there's an impact on real estate then you're going to see some other aspects come about. I'm squirreling cash when those opportunities come. I can make huge returns rather than wait for ten years to make returns. I'm not buying on the speculation of something going on. If I want to buy that, I already know that I've made some money. I already know that I made money on the buy. When do the experts believe that your time is coming?
Garrett
It's definitely happening sometime in 2020. It could happen before. It's always hard because I feel like it's supposed to happen earlier than it does, but because of that greed cycle and because people are buying based upon emotion and there's so much automation of people putting away money. I am a true believer in automatically saving. I'm not a believer in automatically investing and most people collapse and believed that saving and investing is the same thing. Saving is liquidity. There's access to it. There's downside protection or no downside to it other than inflationary issues. Where investing is you're looking for upside gain, volatility could occur and lack of liquidity can be part of that. People have been convinced to lock their money away for long periods of time because of someone else's agenda. That's not the best way to be an investor. If you don't critically think about it and say, "Who's telling me to do this and how do they stand to gain?"
This notion of being a bank, you want people to give you money on a regular basis, hold onto it for as long as possible and get back the least possible. That's the concept most people have bought into retirement planning. I'm in a world where cashflow is king. You look for cashflow first, you create enough recurring revenue to cover all of your life's expenses. That way, every act of dollar you earn can be reinvested and you can have exponential growth that way and part of that investing processes automatically save and deliberately invest. Invest in alignment with what you understand, what you know or you have the expertise and focus instead of diversifying. Diversification is not a wealth building tool. It's a wealth preservation tool and people have been confused about that for far too long. 
Dustin
I saw some videos out there of you talking about owning real estate and it was a thing that was in your portfolio, but you weren't passionate about it. Is your advice to people to only invest in things that they're passionate about?
Garrett
Maybe the thing is sometimes our passions are hobbies. You've got to be clear that that's just a hobby and it may not be the right thing to make a lifestyle out of.  
Dustin
How does one know when it's a moneymaking venture versus a hobby?
Garrett
The dollars will tell you, it's a pretty simple thing. Are you making money and making enough for the time and effort that you put in or not? For me, it wasn't that I wasn't passionate about real estate, it was that I didn't have core competencies there. I wasn't wanting to learn more about it. I was simply storing cash there and partnering with people that knew a lot more about it. The problem is if those people got overwhelmed, their business collapsed, then all of a sudden, I lost a good partner and I'm stuck with the property. I was confused early on thinking that I was ultra-intelligent like a financial Einstein in my early investing days simply because of the timing.
"All ships rise with the tide," as Warren Buffett would say, “But you find out who's swimming naked when the tide rolls back.” Everyone can make that money in a bull market, but the massive transfer of wealth happens when the market turns and goes down. That money doesn't disappear. There are other people making money and it's where we have these major wealth transfers were fewer people get a whole lot richer. It's simply because it's a different rule. It's a different perspective. It's a different mindset. I'm not here afraid of 2020. I'm not afraid of what happens between now and then. I'm simply saying, be prepared that when it does, you're going to be able to provide liquidity for those people that are overextended, overtaxed and not being able to handle that negative cashflow. Therefore, they're going to need a bailout. I'd rather that bailout be me in a profitable way for myself. 
Dustin
I want people to get to know you. You come from a coal mining town. You've got long hair. How did you go from that to helping people, guiding them in wealth management? How did you get there?
Garrett
I had two major events happened when I was a teenager. One was I attended something called Governor's Honors Academy. It was for the top 50 students in the State of Utah. I got to meet senators, business people, inventors and scientists. For ten days, I was on this campus meeting people that were expanding my mind and meeting 49 other people that some of them were coming from very successful families and looked at the world completely differently.
The second thing, when I was fifteen, I participated in something called Rural Young Entrepreneur. It was a competition and I had a business detailing cars. I took third place, which led to being in the Governor's Young Entrepreneur, even the SBA Young Entrepreneur, which meant I started to meet business people and I started to learn from them. I started to think completely differently. As a matter of fact, I take 1% of all my revenues and give it to those two organizations to provide that opportunity for other kids that might come in from a coal mining town, where dreams go to die and they can hopefully escape that and live a life that they love.
Those were pretty instrumental for me and when I want to invest this money, I won as the Young Entrepreneur of the Year. I won $5,000, which isn't a lot of money but at the time, it was to me. I want to turn that into something. I wanted to invest it. I want to build wealth. I wanted to escape that small town. That led me down a path of learning about finance because I was confused. The more people I talked to, the more confusing it became. Fortunately, from the age nineteen to 21, I was able to go for two years and two months and travel around somewhere every single month to figure out who are the best financial minds and what are the best financial events. When you're young, people will talk to you simply because they liked that ambition. I was the one that was willing to ask the question.
I had a killer moment because one of the early people I learned from, I got into one of his sessions but you were supposed to have certain credentials and everything. I got to know his secretary and then his wife, so they got me in even though I wasn't ready. He looked at me like a little pissant. He heard me speak. He said I did a great job and then we're going to meet back up and help him with one of the books he's doing. That was a cool moment twenty years later essentially for me. That two years and two months completely changed everything because I thought in the very standard notion of you set your money aside, you wait for 30 years, compound interest will be there to save you, and that it will all be okay.
The reality is somewhere between 92% to 98% of the time, people are not economically independent when they turn 65. That system is a failed financial experiment, but people don't know what to do otherwise. I didn't have a wife or kids. I could travel somewhere every month because college was relatively easy. I convinced most of my professors to put a test in the testing center, go on my way and then come back and take the test and keep my scholarship. I balanced it out that way, but that was a unique opportunity for me at that time of life.
Dustin
I want to ask this because there's a lot of bad advice out there and the system is broken. Why do you think that we accept this advice? Why is it that this advice is being put out there? What's your stance on that? Why?
Garrett
Because of confusion, complication and compensation. The compensation model for these well-intentioned nice people in the financial industry is typically very transactional. It's selling a product and there is no magic product. If there were, we would buy it, we'd all be wealthy and rich and it would be easy but it's not. We've got to discover our investor DNA. What are our core values, core competencies and our core drivers, and focus there so that we can invest in things that are aligned with that? That takes effort, that takes attention. There's this faulty notion that we can somehow abdicate or shirk responsibility, hand our money over and everything's going to be okay in the future. Because the future is this nebulous time that we don't relate to, we buy, hold and pray, that's something we've heard or you're in it for the long haul.
Einstein said, "Compound interest was a miracle." He didn't say that. Security National Life misquoted him in an event he went to Austria where he talked about compounding numbers. There's all this misinformation and complication so it becomes so overwhelming that people usually go, "I don't know what to do, I'm going to hand my money over because this person sounds smart." When I started in finance, I tried to sound smart so people would rely on me, but that's not very empowering. Almost all of our training was on building relationships and earning trust, not on earning interest. That structure there that that has been underlying all along and the interest of the institutions aren't necessarily aligned with the interests of the individual.
An institution might say, "High risk equals high return." They're not taking the high risk because they've got your money to get a return. That’s not high risk equals high return for them, it is for you. They tell you it takes money to make money, but it doesn't take their money to make money. It takes your money to make money. There's all this where we have to understand what are our interests and what are their interests. How do we align or utilize that instead of being used by that? It takes a different way of thinking and being more critical. I don't think that it would work the way it worked if it wasn't for billions of dollars of marketing and that confusion and complication and that we're already overly busy and taxed.
You've got young kids, that takes a lot of time. We're sleep deprived with young kids. You're running a business that takes a lot of time. The dynamics of life, it's so easy for time to be gobbled up by so many other things. Take finance, which a lot of people find it to be boring instead of a fascinating topic. You've got that. They don't know what to think, what questions to ask, what's out there and what's available. I get it because sometimes when I hear about health or when I hear about technology, it feels overwhelming. I'm like, "I don't even know what acronyms they're using. I don't know what to do." That happens in finance a lot. 
Dustin
Break it down, make it simple for us. What are we supposed to do? It is crazy for some. How do I win in this world that's fighting against me?
Garrett
I love when you said, “Win in this world,” because there are three ways that people play this game. One is the ones that play not to lose. They sock money away. They live like poppers and that's the millionaire next door type of methodology that yes, you too can be a broken, miserable millionaire, then leave money to your kids that they'll blow within three years. That's the playing not to lose. It's very scarcity-minded and there's not much freedom in it. There's the playing to win methodology, which is typically like, “I'm going to be more aggressive. I'm going to work harder."
I was in the play to win model for a while, which was I invested in oil and gas. I invested in up to 100 doors of real estate. I invested two IPOs. I invested in hard money lending fund. I actually created a hard money lending. I was doing so much and I was like, "I'll work harder than anyone else so that one day I can look better than anyone else." The problem with that is if you don't establish rules and criteria, it's hard to distinguish the difference between an opportunity and a distraction. Let me give you a different model of win first then play. This is a better structure. This is how I like to do it. The first thing you do is you take 15% off the top and you put it into a separate account. This is your automatic savings, I call it wealth capture. The best way to do that is looking to four I's.
The first I is the IRS. Are you overpaying the IRS? 93% of people are. If you can reclaim that money, you've found money and already won to start funding your wealth capture account. This is pay yourself first. Capture wealth so it doesn't get gobbled up like time gets gobbled up if it's not structured. This is a checking, savings or money market where you're already banking separate from the other places you're spending money.
The second I is interest. If someone has more than one loan, the likelihood of them overpaying interest on one of those loans is over four out of five people. Renegotiating interest rates, restructuring, finding underperforming assets and paying off higher interest rates so you have a guaranteed return, there are so many things that you can do there. I call it cashflow optimization that puts more money into that account without having to sacrifice your life.
Dustin
You're talking about calling the credit card company or calling up the bank and renegotiating and asking?
Garrett
Renegotiating and re-positioning, where maybe you refinance a loan and then pull other loans. If you have a paid-off car, you can refinance a car, get a 1.9%, 2.9% interest rate. Pay off the 10% interest rate credit card and all of a sudden, you've done something because the installment loan on a car helps your credit, a maxed-out credit card hurts your credit. There's also lower interest. That's part of it and even negotiating better interest rates because for sure when it comes to your credit cards, that's easy to renegotiate if you have the right credit, which is 80 or higher. There's a way to dress that credit up.
The right collateral, which is a home or a car or better collateral for the institution, you typically get better interest rates. The right cashflow reporting, you can get better interest rates by having the right cashflow reporting so that you look better to an institution, even if your income's exactly the same. I've seen people put things on the wrong line of their taxes that all of a sudden it looks like it's a passive income when it was active, or it looks like an education expense when it was a donation, simple things like that. The fourth one is the right connections. We've had people that didn't know where to go other than the regional bank and then we saved them. We’ve got 4.1% interest rate and they were going to get a 6% interest rate. That's a massive difference in a commercial building or a mortgage. Those four C's make a big difference on the second I, which is interest.
The third one is investments. There are a lot of hidden fees and hidden commissions. This is a six to the seven-figure difference to people's bottom line. 1% on a $100,000, if you had $100,000 and you only are 9.2% instead of 10%, instead of going to $1.74 million over 30 years at 10%, 9.2% only grows to $1.4 million. That's $340,000 for less than 1%. Stop thinking in terms of percentages and start thinking in terms of dollars and find nonperforming or hidden expenses that are a drag on your investments.
The fourth I is insurance. There are a lot of duplicate coverages, improper structure, even having higher deductibles, not ensuring the inconsequential things and only the catastrophic things put more money in people's pockets. All of a sudden, you're paying yourself first. You're looking for inefficiencies before you're even budgeting a dollar that goes into your wealth capture account. Once you have six months of savings, you have permission to start allocating it towards investments on anything that gets in there above that. You don't automatically allocate it, you automatically save it. When the right investments come, you pounce on them with that investment.
Dustin
Your four I's or this methodology or process, for the average person, I'm not talking about Warren Buffett stature, when you run them through this process or when you take a look at these areas, what type of benefit are they seeing? What results? I'm not asking you to promise a result, I’m just asking you to go through this work, to scrutinize what's the benefit back to you.
Garrett
We took 117 people around the $500,000 of revenue as a business owner. The average savings, if we drop the top 10%, so you only took the 90%, the average savings was $2,484 per month on their cashflow optimization. It’s how they structure their loans, how they paid them off, using something called cashflow index, paying off any inefficient loans, all that kind of stuff. Renegotiating on the taxes, the average was $11,430 per year that goes right down to spendable cash. 
Dustin
What were the biggest things that you would say are patterns in that?
Garrett
There are three biggest things. Number one, every three years, someone should get a second opinion on their taxes because you can always go back and amend. If you miss something, it's good that you could have otherwise go back and amend it. Deductions, asking the simple question of how does this relate to my business? If it relates, you document it and you write it off. Here are the simplest things people miss. You could pay your kid's $12,000 and that's tax-free to them, even though you control the account and tax-deductible to your business.
You could use your home as a place to host things for vendors or employees, or you could use it to host for clients and you can write that off fourteen times a year and pay yourself that income and not have to claim that income. It's called the Augusta Rule. There are so many deductions for people that they miss that it means they're overpaying tax. The final piece is a reclassification of income. If someone isn't a business owner but can have a business or someone is a business owner, you have to choose the right corporation as an LLC, an S-corp or a C-corp.
That can make a massive difference in your taxes. The way I look at it is a reclassification of income is, “Can I take my active income and make it passive for tax purposes?” Because that can save you up to 15.3% on your taxes. On the other hand, can I take ordinary income and make it a capital gain on the long-term? Because there's a whole notion of Warren Buffett's tax rates lower than his secretaries and it's because he's everything stock and long-term capital gains and everything she has is ordinary income, so that cuts it in half. That could even be you utilizing the pass-through deduction that came out if you can use that. Finally, if you have a business you're selling, how can I make something taxable become tax-free? If we look at those three things, there are a lot of strategies around that. 
I'm not going to go all of them, but charitable remainder trusts are a cool way that you can give your money away and be more tax efficient, but you're the first beneficiary and the charity keeps something when you're dead, not while you're alive. A CAPS trust allows you to sell your business more tax efficiently. AESOP allows you to sell your business to your employees tax-free. There are so many things, but people have to know about it and if you don't know about it and you're too busy, then you're overpaying taxes.
Dustin
This a tee ball question, if you want to call it that. The professionals that we hire, accountants, CPAs, tax professionals, we're paying them money but why aren't they bringing this to us?
Garrett
If you have a CPA, here are a couple of things that happen. Number one, if they're good, they either have to raise their prices to maintain a smaller clientele. If they don't raise their prices, they're going to get overly busy and some of them aren't the best at hiring. Most entrepreneurs aren't good at hiring, so all of a sudden they're in a place where they're overly busy. It's hard for them to keep up especially between January and April. The other thing is most entrepreneurs don't get the CPA information throughout the year and they're not communicating with them four times a year. It's after the years over there, finally getting the information maybe even after an extension, and so they had one arm tied behind their back for the tax fight. There's that piece.
There's also the piece of if someone's out amazing tax person, they might get gobbled up by something called the family office, which you have to usually be worth $30 million, $50 million or up to get access to the very best mindset recruited or they close their practice to new clients. All of a sudden, they're not taking new people on. Take all that into account and then realize most of them are more tax preparers, just filing the taxes than tax strategists. We're asking them to do something they never intended to do and hamstringing them sometime along the way. The more successful you become, the more you need a tax attorney because the type of corporations you choose and the types of trusts that you utilize make a massive difference. You might not even have the right tax team as part of it.
Dustin
You talk about your family office, you've got this book What Would the Rockefellers Do, you believe that everyone should have access to it. How can I get access to these ideas and strategies that the uber-wealthy understand and do? I make $200,000 a year or $100,000 a year.
Garrett
That's why I wrote What Would the Rockefellers Do?: How the Wealthy Get and Stay That Way...And How You Can TooI said, "How can we mimic some of these things for people that don't have access to a family office?" When I was 22 and I discovered a family office, I was first fascinated but then I quickly got frustrated because as soon as I figured out how much money you needed to have to get into one at 22, I didn't have access to that money. I wasn't worth that money and if I gathered up all the assets in my town, who knows if we would have even been able to use one. I naively said, "I want to create that for the first-generation wealth entrepreneur." It took a decade to get attorneys who will agree with accountants and vetting the right investment advisers that work well with insurance professionals.
I had to articulate what our investment philosophy was. I had to create a hiring process and an application. I'm in that business and it was complicated. I can imagine it would be pretty taxing for your average person. I wrote What Would the Rockefellers Do?, which I'm happy to contribute a download for anyone that wants it. I even finished the audiobook on it. That's been my best answer to help everyone out. If your team isn't communicating and coordinated, you will have money slip through the cracks and you'll make mistakes. It's the bottom line
Dustin
I want to move into one of your other books, which is Killing Sacred CowsHow did you come up with this title?
Garrett
We're in a library of all places in St. George, Utah. My co-author lived in St. George and it was the best way to get away from everything and write. We get into this conference room and I turned to him. I go, "You ready to kill some sacred cows?" He goes, "That's the name of the book." I called one of my buddies, Steve, who's pretty spiritual. I'm like, "What do you think about killing sacred cows?" He goes, "That sounds violent, but it grabs attention." I'm like, "We're going to use it." We had the most horrible name for it before that, so that resonated right then. It was us talking about it, so we were already deep into the book before we came up with the name.
Dustin
What would you say then the revolutionary takeaways, the concepts out of that book that people can leverage and implement in their life?
Garrett
There are three things, although this one, because it's ten years later, isn't as revolutionary because I feel like a lot of people have caught on, great organizations are also teaching this. The very first chapter is scarcity versus abundance. If people can't understand why they're in scarcity, they're going to destroy wealth and no luck or saving or discipline or no rate of return or financial adviser is going to save them if they're in scarcity. Being able to adopt a producer paradigm was what I call it versus the consumer condition, it’s one of the biggest keys to building sustainable wealth and enjoying life along the way. The two other chapters are still revolutionary and that the world still is confused about this. I've had deep conversations with people that are so intelligent and finance that these two chapters rocked their world.
One is the self-insurance chapter. I have a methodology there where you can actually improve your cashflow 20% to 50% in the future, how you coordinate assets by not self-insuring because self-insurance is a myth. You're either insured or not insured. The key is how can you get billions like companies with billions of dollars that are more efficient in ensuring to transfer risk on your behalf so that you can utilize more cash while you're alive.
Then the debt chapter. The majority of the population has the word debt confused. They think that every loan is debt, but it's a function of your assets versus your liabilities. Some people say, "I'm in debt,” when they're actually in equity. If you're confused about that, your actions are going to be completely out of your best interest. This is one of the most freeing things that people can learn what debt truly is and learn what an inefficient or efficient loan because there's no such thing, this is where this starts to ruffle some feathers. There's not good debt or bad debt, there's debt or no debt. There's debt or equity. I have loans but I'm not in debt. Until you understand what that statement means, then you're always going to be burdened by having the wrong definition of debt that's going to infiltrate your thoughts and take different actions.
Dustin
We're big here at WealthFit on mindset. How does one determine if they have a scarcity mindset and how do we act upon it to change that?
Garrett
There are several things that help us if we're in a scarcity mindset. Entitlement is the mother of all scarcity. If you feel entitled, if you feel like a victim, you're in scarcity. If you see footprints of failure. I love this question, “How's that working for you?” That's a great question. All of a sudden, you find yourself complaining and justifying, you're in scarcity. I talked to one of my good friends when I was heading to the airport. Being in scarcity was the reason I did business with that person. They were always talking about how competitive they were and they would eat my lunch if I didn't collaborate with them. I had the wrong intentions of getting into business with them because of scarcity. The reality was I knew in my gut it wasn't the right business venture.
It was going to be a distraction and it was. I wasn't strong enough to be abundant enough at the time. It's always easy to see perspective in the past. The easiest thing is to get the right people around you. Let them call out scarcity if they see it. If you're in scarcity, do one of two things. Call your peers and mentors that you highly respect and tell them what you're dealing with because we all deal with it. Then the second thing is if you find yourself feeling sorry for yourself, not feeling energized, spend time with great people and support them and deliver value rather than complain about your situation. When we're complaining about our situation, it's scarcity. That's okay to vent one time but if it's consistent that it keeps coming up, you're in scarcity. 
Dustin
Is the scarcity mindset the only thing that prevents people from being financially free or achieving some level of freedom?
Garrett
Financial freedom in my mind is when money is no longer your primary reason or excuse why you do or don't do something. It's no longer the primary reason or excuse. To be financially free, I look at it in the three measures of worth. There's price, which is what we pay. There are costs, which is our economic impact on us and others. The third is value, which is how we feel about it. What's our overall feeling of satisfaction? Value is the most subjective of them. Price is what we pay. When people only look at the price, that's scarcity. That's why we see retail stores 40% off, 60% off, Black Friday, people are fighting over stuff to go to Black Friday. Costs are our economic impact so something can have a higher cost or higher price, but a lower cost. Like hiring an amazing accountant might be more of a price tag, but it might save you so much more money that you still net more.
Investors are better at assessing cost from an economic standpoint going, "I'd rather pay for a better employee because they produce ten times more." Higher price, lower cost. Value is how does it feel? Why do you want it? If you start with value, then go to cost, then go to price. I call that financial freedom. If you start at price and go nowhere else, that's financial slavery. If you go to financial, look at the price and then maybe consider the cost, you're getting on your way to financial freedom, but you're not there.
Most people in the world live on, "I can't afford it." That's that scarcity. That's not financial freedom and to me, economic independence is having enough recurring revenue from investments and assets and entrepreneurial income that doesn't require your daily involvement to cover your expenses. That's the first step towards having an accelerated amount of wealth, but the financial freedom you can have in any moment that you make the right choices and see the world clearly and that you're now making your choices from abundance versus scarcity. 
Dustin
What’s the best investment you've made?
Garrett
I made a huge investment in my marriage in 2012. That's paid off because divorce is expensive as hell. Not that we were heading that way, but we were limping along in 2010. I said, "I'm going to put her first." It allowed my business to mature. I got a lot happier. I understood how much of a payoff that was. In my twenties, I want to make more money than anyone I knew. I was super competitive that way. In my 30s, I had to learn some lessons and understand. I had to learn where I was in a dangerous position that if people could figure this out, anytime you are naive and arrogant, that is a recipe for destruction. I see a lot of people during bull markets that are naïve and arrogant. They are going to have a painful lesson when things turn.
Dustin
I’ve got to ask, being a family man, being married, what were some of the highlights of things that you did or that you worked on to make life amazing with your wife? 
Garrett
I created a vision for our marriage. I started buying books and reading books about marriage because I'd done that in business and finance forever. I hired a guy named Dino who had a business of marriage program. We started talking to him every other week. I looked at three couples that I thought had the most epic marriages and I started spending time with them and we went out and had a gathering with them in Chicago. She interviewed the girls. I interviewed the guys and looked for what the best practices were. I didn't spend time for six months with people that were going through a divorce or overly negative about marriage so they could infiltrate my thoughts.
I did the same successful things that I did in business, but I applied it to my marriage. By doing that, my marriage got exponentially better. I thought it was a lot harder than taking the business to the next level. I don't have the emotion around my ideas taking longer or not working. I don't feel bad, but if I'm putting in the effort but it didn't work with my wife, but it had more of an emotional sting to it. 
Dustin
How about the worst investment you've made? 
Garrett
The worst investment I made was setting up a hard money lending fund because people invested in it because they knew me, liked me, not because they understood hard money lending. When some of the projects that we were funding weren't working out, it became a massive distraction because I know how to break the bad news to people. I also ended up writing a lot of checks. I never made any money on that. I put $170,000, $190,000 of my own dollars in as an investment. I paid for all the legal setup. I did all this kind of stuff and I was talking about that. I only did it out of greed because my brother-in-law and I were talking, he was like, "Why aren't you making money off hard money? You’ve got so many clients, so many people that trust you, all these other people you know are making a ton."
The next thing I knew was the greed bug hit and I started getting involved in that. It was this major distraction. It was a potential hit to my reputation because people could lose money and they did lose money. I ended up making some of them whole. I'm settling and writing checks to some. We did everything right as far as documentation and having the right legal things. I didn't sleep well, we're feeling like that was all there was. When I hired a CFO and a CEO in 2010, part of the requirement was we're going to pay these people back if you'd come on board and that has to be part of the deal. They like that and it's helped me sleep at night, but that was expensive. We're talking about a lot of money and some people didn't get paid back because they went dark and stopped talking to me, essentially.
Dustin
You mentioned greed. Were there any other markers, if you had to tell you the younger version of yourself not to do this or, "Look at this. This is the sign." What are the signs?
Garrett
I was sending so many deals to this guy, Blair, that was doing all the analysis. We had this guy, Phil, that did the books, the compliance and worked with the attorneys and documentation. Then Blair analyzes the deals because he had a development background and I found deals and hand them to Blair and I sent so many deals to Blair that he passed on, which showed how naïve I was on feeling like these deals were good because everyone tells a good story. Everyone thinks their investment's going to be great and then it works out. I wasn't spending that much time analyzing them. Why was I doing it other than to make money? Some people think, "You're in business to make money, no doubt you need to make money to stay in business."
To be in business long-term, you've got to have some purpose behind that money. Money and dollars will follow value. Value is a huge component of purpose because it helps you to do something where you can see beyond the minutia, where you can deal with difficult things. If it's only about the money and times get tight, people belt too early and far too quickly. It was definitely greed that got me into it. I want to help them out. I want them to make money, but could I have made that money on my own had I not had Blair? The answer's no. We didn't do that well. We had a few good years and then when the market turned in '08, we’ve got our butts handed to us. Sometimes it's like, "We're at a 55% loan value. We are going to be golden." That stuff didn't even matter during that time. No one wanted to buy.
Dustin
What do you tell your kids? You're a financial guy and people are looking at you. I’ve got kids and a lot of people in the audience got kids or no kids. What do you tell them to get them prepared? What do you do with them?
Garrett
I tell them they can definitely earn money by doing things and they can figure out what they want to do, but they should be paid way more for their mind than physical activity. They always want to earn money to buy video games or something. They’ll be like, "I'll do this." I'm like, "You could do that or you could memorize our family mission statement. I'll give you $100 or you can read this book Richard Rossi wrote and I'll pay you $100 and you have to do a report on every chapter." I'm trying to teach them that we're in the time of brains over brawn. I'm also teaching them to get good at building skills that are aligned with who you are.
There are three things that are going to be critical. You've got to learn how to create, you've got to learn how to connect and you've got to be adaptable. If you don't have those three things, we’re moving into a time where if we get stuck in a skill set that we're so attached to and we identify ourselves with that, we're going to find that that's archaic quickly, and you're going to be trend to grasp for the past to continue to exist in the future that no longer warrants or invites it. That's a scary thing about the future for a lot of people. If you have created a connection and an add to it being adaptable, I feel like you're going to be equipped to handle the future.
Dustin
Those are great lessons. How do you feel they're taking these lessons?
Garrett
They're ten and thirteen. I had a profound conversation with my thirteen-year that I felt I connected with him deeply for the first time on this. We're trying to find out what do they love, what do they enjoy, what do they want to do? Taking the time to select what that is more important than being busy and working hard because work ethic combined with bad philosophy still equals bankruptcy. I grew up with plenty of work ethic, but very little financial IQ or knowledge other than it's important to save and don't outspend what you make. Those are good principles, but those don't lead to wealth necessarily.
Dustin
I'm going to make the assumption that you’ve got work ethic from your father, a coal miner. What did you get from your mother?
Garrett
My mom is the one that encouraged things like Governor's Honors Academy and good grades and starting a business. It was mutual between my mom and dad about my starting a business. My mom helped me get a contract with the credit union that she worked out. My dad helped me get a contract with the mind that he worked out. They were both supportive that way, but my mom didn't want me to ever step foot in a coal mine. 
Dustin
How about your dad? 
Garrett
I don't think he wanted me to step foot in a coal mine. He wasn't as vocal, he's quieter. My mom is very vocal and we did an origin story in December of 2017 and I interviewed them both. They had a hard time when I chose being an entrepreneur because I didn't feel stable or secure. They're uber-supportive of it and my mom actually has worked on my intellectual property company and my consulting and speaking company as my controller. I always say, "If I'm ever going to be embezzled from it, it might as well be someone I know and love." She doesn't like when I say that, but it's funny. She's been instrumental in helping a lot of those things. 
Dustin
One of the things that resonated with me was when your wife was talking about you designing your job or designing your future because it didn't exist. Can you elaborate on what she was saying there? 
Garrett
It was cool because my ten-year-old on the way home from that filming was like, "What do you mean that dad design a job that didn't exist?" That started to impact him and interviewing them. I was pretty emotional when they got interviewed because the youngest was like, "It would be cool to be an entrepreneur. That's cool." Then the thirteen-year-old said, "My dad and I were a lot alike. We don't give up. If I die in a video game, I keep going." That's cool that they both said positive things. I like the thought that you invent it. I remember having an early coach that said, "You're a part of this system but you're going to create your own that's much more powerful." I thought that at the moment, it’s a little bit salesy to keep me working with him but he was right. I created something that is much more empowering to me and my organization and everything that we're doing. We're now showing it to the financial world and letting them learn from it. It is cool to invent what you want. It is a hard path sometimes, especially in the financial world.
I don't do assets under management. It's easy to make money in that world. Once someone becomes a client, they stay for like eight and a half years. That's unheard of. You get paid every year whether they make money or not, as long as they don't leave. It's a fee they don't even think about because it's automatically coming out of their account. I chose a different path where people have to write me a check and we've created products from scratch that are like educational products, a family office team for the entrepreneurs that we support and workshops. I feel like I get to be an artist and I get to do all these things that excite me and that I get to ask questions and I get to say, "What would work about this or what wouldn't work about this? What lessons have I learned and what can I share?" We hosted an event where people built a family constitution for their trust. They have a dynamic way to pass on non-monetary assets. It's the most important book because it's a book that helps all of their board of trustees or their heirs understand what they stood for, who they are and their core philosophies in a distilled way.
The US had a 4,400-word constitution. It was unprecedented and all of a sudden other nation started to adopt that and there was a huge amount of prosperity came from that. There was there to protect life, liberty and the pursuit of happiness. I feel like that gives more freedom without ignorance to future generations. To guide people through that, that's pretty cool that I got to write that workbook. It was hard. I’ve got to write that from scratch and work on that, then watch people go through it and experience something they wouldn't have had I not done that work. I hope to continue to be that example to my family. Build a life that you love and do things that you love. Just make sure that you know the difference between a hobby and a business. 
Dustin
What would you ask Buffet?
Garrett
What is the investing in? Why? What does he see happening with the market and the economy?
Dustin
Why would you ask him those questions? What do you respect about him? What do you think insights he'll give you?
Garrett
I already know that he’s good at one thing, and that's allocating capital. He believes in the circle of competency, which is Ted Williams approach to baseball, which is which pitches to swing it and which ones to not. I feel like Warren Buffet's been good at not being swayed by a greed land and sticking to what he knows, and being willing to say no. I love his quote of, "The difference between a successful investor and a highly successful investor is in the proportion of the times they say no." Highly successful investor says no a lot more times. I like that he knows which pitches he's going to swing at.
He avoided the whole dot-com bubble when it got burst. He didn't understand it well enough. He's bought companies of a page and a half of someone writing the thing that makes sense to him. What a lot of people don't know about him is his philosophies that move into companies could be pretty hardcore. My uncle worked for PacifiCorp when they bought it. He wanted to retire pretty quickly because he was firing people. They're asking a lot more from each person and not necessarily paying them more. There's a reason why that stock rose, it was on the backs of people that were no longer loving what they did.
He's brilliant in the media and he's brilliant in his thought processes, but there's also this other hidden component that not a lot of people think about. I would love to ask him about his methodology because he's not a stock market investor. He's buying companies. He becomes the major shareholder and they can start to implement a lot of their philosophies based upon that. Most people think of him as a great stock picker, but he's not a stock trader. He buys and hold long-term and implements your methodologies with this organization that he has. I know he reads a lot and that he sticks to what he knows and that he is so incompetent and things outside of his expertise. How did he discover that? How did that evolve? What were his worst investments? What did he learn from those investments? We'd have a lot of conversation because we would see eye to eye on a lot of stuff. I could learn a lot from him.
Dustin
What do you do to get better? What do you do to up your game financially, getting into that top 1% or 1% of 1%? I'll take it outside of finances.
Garrett
What I uniquely do that a lot of people don't is I learned from my mistakes. I asked what are all the lessons that I could learn from this? What would I do differently? What insights could I share with other people so that they could hopefully have to be armed with a little bit more to avoid some mistakes? Although some mistakes are definitely a good tuition and the scars are part of how we learn. A lot of people, they don't make the same mistakes twice. They make them seventeen or eighteen times until it becomes so painful. I'm watching people that I've known that went through hard times and difficult things back in 2008 make the exact same mistakes over because ten years have passed. I feel like I'm good at capturing those lessons and then creating models for other people to understand those lessons and apply them through tools. It's not just a word or it's not just a paragraph or it's not just a book, it's a tool that they can utilize to assess and additional support systems for them to utilize so that they can stack the odds in their favor.
Dustin
What do you do outside of business to get better?
Garrett
I do stand-up comedy because I feel like anytime it helps me write, it helps me speak and it's something I enjoy and it's nice to get a little bit nervous and stretch the mind.
Dustin
Do you go to a little club in your hometown?
Garrett
I've done shows in Colorado. I've done three different clubs in Utah. I've opened multiple times for these comedians. I've done up to twenty minutes. I do some open-mics as well as testing out the material. That's been a lot of fun. The people I hang out with and the conversations I have are the most important way to get it. It's nice to read, I find that with having kids and having a business and doing a lot of writing, reading is something that typically goes to the back burner for me. It's a lot easier to go to the authors and have conversations with them. It's a lot easier to be in. I came from Riviera Maya where we spent a couple of days. I was hanging out with five other people that are bright, one of the masterminds talking through that. A lot of it comes from the people I associate with and the events that I attend and the conversations I have.
Dustin
I truly appreciate you being on the show. You'd mentioned giving away a copy of the book would definitely appreciate that. In addition to that, where can people find the book and where can they find out more about you and maybe even catch you doing a stand-up?
Garrett
Catch me doing stand-up, I haven't put out a lot of videos. I put out one highly edited video. I don't swear in it or anything, some of my materials are a little bit edgy. That's what's funny. I've hidden that persona a little bit so far unless someone shows up live. I have done standup at some of my events and at some masterminds I attend. WealthFactory.com/podcast is the best place to go. Grab some cool resources and get to know us better.
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