214. Replacing Your Salary with Real Estate

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How exactly do you replace your salary with real estate? Well, we're going to find out about that and we're going to have an amazing discussion with a returning guest. We are joined by Donnie Mangos, who's with us here. Successful real estate, real estate investor, a realtor, a wealth strategist. He's passionate about finances. He sent us a copy of this amazing book, Replace your salary with real estate. We're going to dive into that a little bit and of course we're going to hear more about Donnie's incredible journey with the infinite banking concept. So welcome back to the program, Donnie.

Hear, hear. Thank you guys. Pleasure to be back here and great to see your faces.

Now, when we extended the invite, you know, you seemed really excited about jumping back on the show and I understand you do listen to the program, so I'm really curious to dive in and hear how that's been going for you and, and what are some of the takeaways you're getting as you're consuming the, the podcast itself and thinking about integrating it into your real estate practice as well as your, your ongoing expansion of your real estate portfolio?

For sure. There's well to speak to the part about the info that I'm gathering, I guess almost feedback for the podcast feed, feedback for the ascendant ecosystem. You, you guys put on a clinic when it comes to making sure you're front of mind with the drips with, with the calls, the podcast you're ever present. So your marketing team is doing a fantastic job. But, but you two are doing a great job of getting the message across in a, in a very easy to understand manner. Here's what I, on the whole, here's how I see what's happening. It is not a very difficult concept.

Once you really understand what's happening.

Right.

But just the constant messaging, it reinforces and it reinforces and it reinforces and I imagine it's got to be hard for you guys to continue to create content around something that is not really changing. It's been around for 200 years and it will be around for another, you know, century or two. At least it's going to be there. But you, you find a way to make it relevant to what's happening today, to what's happening next week, and continue to keep me focused on, you know, on the plan. It's not shiny, it is not flashy, but it's practical and it's, it's shaping everything about me.

That's why we continue to create the content, because the, the world is bombarded with all that noise, the bright shiny objects, the new lash in the pan way of doing something financially in your life that's going to somehow transform it in the next 12 hours. Like it's. The world is just bombarded with that and we just bring people back to the ridiculous simplicity of the infinite banking concept. And, you know, it's interesting, Donnie, you got me thinking about this. I haven't mentioned it in a while, but it, it merits mentioning it now. I can't think of, and I'm sure Richard can attest to, and I'm asking on the spot, you guys can both agree we didn't talk about this before the show, but we haven't had a single client contact us since the inception, which is now we're. We're just about to enter our 16th year. Not one client has ever contacted us to say, I'm really pissed off that my cash values keep rising every day in my policy or my system of policies. It's really frustrating me that it's never gone backward and that there's no volatility I'm triggering. No tax on the daily buildup, no tax on the death benefit, and I have ready access capital on demand, on my terms. I'm really irritated by that and would love to talk to somebody about it. It's just never happened. What?

Isn't that good?

So good.

So that's, that's why we keep recording the content, to keep the message top of mind, so that people are reminded that sometimes it's the most ridiculously simple methods that are the most ridiculously effective.

Yeah, it's all reliable. It's. We mentioned the word Buick. It's the Buick. Like, it just works.

Yeah.

And you don't need to do too much to it. Like, the framework exists and has existed for a long time. So it's backed. It's just the way that you create, the way you design it, the way you engineer it, your words here. And it changes. And the person who's using it, the way that they interact with it. Changes completely the results of what that thing was intended to do. And you're completely compliant, you are completely within the rules, you're making it work for you. So it's a lovely practice, It's a lovely model. It's who I am now.

Wow, that's humbling.

Thank you. Fascinating statement and I'd love to dig into that more. And I want to relate this to, you know, your journey since the last time you were on the program, Donnie, I'm sure a lot's changed with you. The real estate market's been changing, of course, that's your primary, your, your, your core business. And last we were here, you know, you're still fairly new into your experience of learning about the infinite banking contact and implementing it to, in your life to a certain degree. And so I'd love to hear, maybe share with our listeners a little bit about how that journey has shifted or changed for you since the last time you joined us on the show. And, and, and then if you can expand on that, maybe how it's intersected or related to your, your business endeavors around the real estate market, which is also always in flux to some degree.

So in terms of things shifting, I, I'm less of a Realtor than I was before, that's for sure. I have a real estate team and we absolutely assist with people when they're, when they're buying and selling, of course. And my focus has always been towards investment, property ownership, how that's changed. Just to give you some background, I'm in Ontario, I'm in Toronto, and it's very difficult to be a Toronto Realtor talking about investment properties if you have a conscience to make suggestions to clients. And so a lot of my business is no longer local, it's elsewhere in the country. I'll leave it at that. And so there's less need for me to make transactions happen. My team services are clients here that are looking to move because life is making the move. So that's happened. But what I do is I'm far more involved on, well, let's say, well, strategy like that's, I'm, I'm partnered with a couple of different firms and I do a lot of discussion, I do a lot of educating seminars, things like that to help people see a future. It almost always involves insurance, by the way.

Beyond what the, you know, what the current present is, far more exciting future and help them see the light.

So I can take that, I could make that change and be confident because of the legwork that I went, that I put in Place with my insurance policy. Now there are insurance policies, so it's getting even stronger. Like the kind. The confidence and the courage that it gives you to just go and do what you want to do. I'm doing what I want to do now. Right. So that's given me that. Rich, after our last podcast, you got angry at me in a way. Like, what do you mean you haven't used your policy? What are you doing, man?

And.

And I completely. Right, you're completely calling me out, saying, you're not walking the walk. If you want to see what it's like to live in these shoes, you got to go through this. What do you call it, a circle or you got to go through this cycle. Way to read how this works. Yeah, ask for a loan. See how it works, see when you get it, see how you pay it back, pay it off eventually. I don't even care how much it's for. Just do it. So you pushed me. I did it. Done it a few times now across both policies, and I'm finding more and more ways to use that to my advantage. I'm not afraid to borrow now because it's giving me the confidence to put more back into it, which is building my system, which is increasing my death benefit, which is increasing my cash value, which is increasing the policy loan avail. It just keeps going. So it's wonderful.

Become your own banker and take back control over your financial life. Hey, is this even possible? You may be asking, can I even do this? Well, you better believe it. In fact, it's easy to get going. So easy that we've put together a free report, 7 Simple Steps to becoming your own banker. Download it right now. Go to seven steps ca. That's seven steps ca. Now, let's get back to the episode.

In contrast. Donnie, tell me. Lenders aren't afraid to lend.

Isn't that so good? Right?

So if you think about the fact that you're all four characters in the financial play now, which is, you know, true to form, what Richard would have been pushing you to become.

You pay the premium, you're the depositor, you access the loan, you're the borrower, you control the repayment schedule, you're the banker. You participate in the divisible surplus generated as a result of your activity and everyone else's activity. You're the bank owner. So when you made that comment, you said, you know, I'm not afraid to borrow.

Remind yourself. You're. You're the bank owner. You're not afraid to lend either.

A little while ago, I was approached. So you're right. Opportunities find you when you have capital.

That's right.

Little while ago, I was approached by one of my close buds. Said mangoes. I just need a few bucks for. For this specific reason, for this short period of time. I could get it over there, but it's kind of expensive. If you want to help me out, I'd love to. I'd rather go to you than them.

Sure.

Policy loan. Here you go. Paid back. And now with the surplus, it'll go towards accelerated deposit option, which is just going to do the same thing I just said. It's going to keep building and building and building. So marvelous. Marvelous stuff.

That is so great. And as you went through that process.

As you were describing, what started happening to your thinking, your. Your imagination was freed up to think about this.

Absolutely.

Say, wow, okay. You're doing something different here that you haven't done before.

Yeah.

And let me inspire you with some other ways that you can continue expanding this in your life. And so what an incredible update. Very happy to hear.

Thanks, man.

That you're in the process. Good for you.

Thank you.

Were you nervous lending money to someone else?

No, I'm a lender. I'm already a lender, so I'm. This is the least risky of the investments that I've made or the ones that I've made.

So, again, I'm a former UFC fighter, so I can handle anybody who.

Repay their debts.

Not quite. Yeah.

But I do know a guy, if you need.

Jay, you've got a. You've got a Guido. That's what Nelson used to call. You can call.

I'm married to calabres.

And so what's inspiring you right now in your professional journey? So you mentioned, you know, doing these events and interacting with people and sharing.

I guess, knowledge to help them build a bigger future, you know, financially. What's inspiring you about that right now? Like, what are you feeling really energized, you know?

So you. You see this too, when you share what this is with people after they get over? I don't understand. Is this a pyramid? Is this a cult? Like, what are you talking about? After you get over that part, the next part is, why haven't I heard about this sooner?

Right.

And there's never a reason. It's just. I don't know. It's been around for 200 years.

Yeah.

I'm not sure why you haven't heard about it. I am equally as upset as you because I didn't hear about this until I heard about it. So my, my motivation comes from talking about this with more and more people in my circle. I'm going to be there. I'm going to be here very soon. I want others to be up there with me. I don't want to be alone. So I feel compelled to share what I know. Not pushy, just coming from education and saying, hey, if you're up for this, let's have a chat. I can, like, I'm pretty sure I'm going to blow you away with what you can do if you just change a few habits in your life. That's it. Wow, that's powerful.

I love that. You know what's cool on the head, Donnie? With a couple things as you talked about going through your own loan experience and you've, you've mentioned behavior a few different times and obviously we promote that. We talk about that here all the time. As, as did Nelson. So we're, we're literally just fumbling our way through life, channeling our inner Nelson. That's what I like to think of it as. Like, hey, I just get to channel my inner Nelson out into the world. I just try to do what he did in Richard's way to the best of my ability. And, and that, that, that compulsion. But the act of the doing that you've, that you've gone through some of those revolutions and seeing the result of that that's created you, you know, to a degree. Whether you know this or not, you've almost gamified your financial life to some degree. Because the act of the doing things is kind of like you're playing the financial game and you can see what's happening in the results that you're creating. And you can even do it in a short time frame, which you've basically been able to do. And so the ability to show that to someone is now it, you know, there's nothing you can feel other than empowered and excited to do that when you get to see the result that you're creating.

100%.

There might be another book out there for you, Donnie.

It's funny you should mention that, my friend.

Replace your income with cash value.

Close. Ready. So I actually have written half of it. It is called, and I will share with you guys a page that I'll build for, you know, a wait listing. But it's replace your salary with the new real estate and the new real estate. I'll tell you, it's a whole life dividend paying insurance policy. And I relate the two to show the benefits between them.

Wow.

Or similarities. Don't steal that now. So that's coming because I, again, I need more people to be aware of this. I just am, you know, I'll get over this in a second. But the part that of me, the angry Greek guy that's still angry is my dad didn't know about this and had some, had he had advisors or people like me at his age in his life to say, hey, can we have a talk about this? That's the kind of stuff that motivates me at this point. And I'm not pushing like this again. It's not a cult thing. I'm just saying if you want to, if you want to hear something that might change the way you see your own wealth, your own finances, your own control, I got time for you if you want to make time for me.

You know, it's interesting, Donnie, on that exact note is that conversations over several decades about the tool right, used to implement the process, a dividend paying whole life insurance policy, or as Nelson would encourage, ideally a system of policies. Conversations were being had every day, day in and day out, by life insurance advisers. The difference between then and now is the amount of premium that was being discussed. It was like, you know, if you put this whole life policy in place, it's dividend paying. You can use the dividends to offset your premium. And all you need to do is put a tiny bit of money into this policy. Well then when you look at the cash value, you've only got a tiny bit of cash value with the, the, the difference now in the conversation is you can put almost unlimited sums of money into this tool. And when you look inside the reservoir, that amount of cash value just dwarfs what you would see. Like we rich can attest to this. We love seeing policies that were constructed 40 years ago and a person says, you know, my, my parents or my grandparents put this policy in place on my life and they were putting in $50 a month and it doesn't look like it's done a whole lot. And it's like, well, why don't you think about this differently? What if they were putting in $500 a month? What would that table of values look like now? And so if you envision the more capital you put in, the more capital you have ready access to this is that distinction. Because we hear this feedback a lot. Oh, you know, I, my dad didn't know about it, my grandfather didn't know about it. I can bet you a dollar to a donut that somebody spoke to them about whole life insurance. But it was just Putting a little penny in the deal, not a bunch of money.

Right. And so you're right.

That. That's the distinction.

The whole. The whole thing was just like you guys mentioned, it's. What is the lowest amount I can pay for the highest death benefit? Yeah, like, that's it.

Right.

And that's. You're looking at, like, an expense. This is not car insurance, where the results are all the same, regardless of the. No, this is. This is. This is your vault of cash. Why would you not want to build towards that? Like, don't be afraid to capitalize.

Right.

There you go, number two. And this is one of the points I was going to bring up with you guys. Like, reading through the book, listening to you guys with Ryan Griggs.

The premium should be your income. Like, what are you guys even talking about? Your premium should be your income. And this my last time reading through the book. Oh, premium should be your income. Why not? Like, why shouldn't everything? I mean, you would never get insured for that amount of money, but why not? Your premium should be your total income.

And that's why you should have a system. And you should ideally insure everyone that you have a beneficial interest in. Because you're right, there's no way that you would get that amount of death benefit past the underwriters on your life. Life individually. Whereas if you have a system and you have several lives insured, you're not only diversified in lives insured, but you're also able to get more capital into your system.

Y.

But it's meant to be done gradually and incrementally over a period of time. It's not meant to be achieved in an afternoon which as human beings were regularly being conditioned to.

To.

I need it now. I want it now. I deserve it now. I'm entitled to it now. I want to construct it now. I want to fund it now. And then I can move on to Netflix. I don't have time to be thinking about becoming my own banker, you know, Whereas we're continually. Like you said, there's a reason why we want to be seen and heard everywhere in North America now. So we. It's not just Canada. Our message is spreading in the United States. And now we're putting this horsepower behind it and we're going to hear the same feedback from Americans. Hey, we see and hear you guys everywhere. Yeah, that's. That's an engineered outcome. That's. That's not the algorithm. That's us pushing that.

Yeah, this is a classic win, win when that happens right like.

Yeah, exactly.

You boys deserve that credit. And you're gonna be helping a lot of people who would otherwise miss the boat thousand percent for another generation.

Well, and Donnie, you. You mentioned, of course, a future bigger than your past. That's part of what you're. You're helping other people discover. And when you reflected on rereading Nelson's book. So first of all, thank you for being a continual student and rereading. So I want our listeners to really take heed of some of the things that you're making note of here. You are reading the book again, and the next time you read it, you learned something new. You thought about it differently, you're in a different mental state. So you're picking up things and your understanding of it is shifting based on what's new and changing in your life and the vision that you have for yourself. And so it's okay to have big targets. And so the idea of premium equal income, maybe that's a stretch for a lot of people and for everyone it is. But that's a target. And so when you set your sight on a big target, your brain starts to implement things to get you to that stage. So whether you hit that eventual target or not does. It doesn't fundamentally matter. I can, I can guarantee you, if you're planning for this one, you're going to start making momentous moves towards that end result. And I think maybe you didn't specify that, but to a degree, that's what I'm picking up. Based on what you shared on your last read of Nelson.

Yeah, it's directionally correct. Well, you know what? I wrote notes because I knew you're going to ask this question because I knew that I was going to share that. I've read the book. This is your guys. You guys insert these things in the book when you send them out to people. You used to have a beautiful banner. You remember this? This book will change your life. Yeah. Rocked me to my core.

How.

How powerful that little banner thing was. But the last batch, it didn't come in. Just so you know.

Oh, thank you for letting me know.

That nobody should get fired message. No, no, no, no, no. So premium should be your income. When I saw it this time around, I was like, I get it.

The. I think I glanced over the first couple of times or just. I didn't really understand. That's the one.

Recapture. This entire. This entire program, if you want to call it that, it's all just based on recapturing and compounding. If you boil it down, to its simplest form, it's just you're paying interest somewhere so you can recapture it. If you do it this way and then you allow it to compound, it's just a tool that allows you to recapture and compound. And that became very clear to me this time around. That's why we're doing this. And it's all tax free and all that stuff.

Yeah. And, and just more. And then it gave me more of some background or some more. My mind started moving towards what other opportunities can I use this policy loans for? Not only am I just going to sit there and use it, you know, as planned, what else can I think of that I could put this to work on to benefit me and my family? And when you start thinking like that, you start finding things.

What are some of the things you've come up with recently?

Well, actually, I want to talk to you about that today. So a lot of the discussion today, I believe we're going to go over some corporate stuff. Holding a policy in your corp, accessing it personally or not, Right when you get the loan. But also I want to start, I've got a corporation. Corporation's got expenses, corporations got payroll, corporation owes, hst, all these things. It's not like if I put that money towards these expenses, if I paid cash, the money's gone. If I used my policy and then a loan, I can recapture all that interest. I can figure out a way to grow that policy very quick, very quickly. So I just wanted to maybe speak to you guys about best practices along the lines of using the corporate policy personally and for within the corporation. How's that?

That's fantastic. Absolutely.

Because I don't think you have content on this specific kind of category in your podcast.

We definitely have some corporate stuff, but probably not in the direction that you're asking, not, not to the specificity you're asking now. Now Jason has got a lot more activity on that level than I do. So I'm going to, I'm going to try and boil it down to some simple things, you know, for me and that I see. So one thing that you need to be mindful. So just speaking briefly to like corporate policy, doing personal things. Well, we do need to be mindful of that. We're not taxing. I'm not a tax professional. I can't, you know, providing tax advice. And so we encourage everyone to make sure they're having a conversation with their accounting professional around that. But in general, broad terms, you know, I look at a drawing, you have a line, a horizontal line, and above the line is the corporate realm and below the line is the personal level. Anytime money transfers from above the line to below the line, the taxman in, in today's situation, I would say Uncle Trudeau wants to get their hands on some of it. Okay? And there are some ways where you may be temporarily, I say temporarily be able to move money across this line, but there you then have to move it back across the line to minimize or avoid a taxable event if you're going to do that. So, like shareholder loans. If I'm a shareholder of my corporation, I can take a loan as the shareholder and in fact, as a shareholder, I can lend money to the corporation as well. So often through a balancing act of some of that is maybe where people will see some, some potential to use that corporate policy at the personal realm. But you have to be very mindful and have a good discussion with your accountant about timelines, time frames, and getting really clear on the repayment model. And so I'll give you an example. I recently took some loans from my corporation as a shareholder and I have a very specific repayment model that I'm doing. And I'm actually going to utilize and do lump sums back in at the end of the year in that 12 month period before the tax year ends. So come December, I'm going to send money back to the corporation, but then I'm going to borrow some back out in the following year. And over a period of a couple of years, I'm going to be taking the total shareholder loan balance and I'm reducing it and reducing it and reducing it each year. So it's scaled over a period of time and ideally in such a way where I can prove to the tax officials that I am replacing that money that I borrowed from the corporation and I'm doing in an incremental basis. What they probably care more about is how what it looks like at the end of the year versus, you know, what is it on March 31st as compared to September, you know, 29th. Like, that's not something that from my understanding, they care a great deal about. So that's one example of, of kind of considering doing it at the personal level. Just be very mindful. Again, have a good consult with your tax professional. From the corporate scenario, like you identified, you have business expenses. Some of them are monthly, some of them are annually. So as an example, you know, at the level that you're at, Donnie, you know, you're running events, seminars, you're building a list, you're going to use technology, tools, A CRM. You know, lots of software related things that people use to run their business these days, especially a type of business like yours. You know, as a Realtor, you have annual licensing fees. These are things that you have to do as regular expenses. Well, if you think about softwares in general, most softwares have a pretty high discount for paying annually. They want the money now so they can invest in R and D to grow and marketing to grow and get more customers. So they, they'll give you a discount to pay annually. Well, if the discount is 10, 20, 30%, sometimes it's even more than 30%. Well, you can take the monthly payment that you used to make and you can replace that back into your policy and you could do that corporately. So that's a really perfect example where people can get this started at a small level. Now depending on the size of your business and the amount that your outlay is of those type of tools, you know, if you're a larger scale business, lots of employees, you may have an HR platform like you might have a much higher degree of savings potential by doing that annual outlay and returning that capital back into the policy. So that's a perfect.

Beginning starting block I think a lot of people can look at, depending on how their business is structured.

Thank you.

I would add to that too. Donnie.

Let me give you a scenario. So let's assume that your corporation.

Also.

Lent money to this individual that you described earlier who borrowed money from you and your corporation lent some money to that individual and the individual had a five year repayment schedule. It was a loan for a pretty big undertaking.

Sure.

And then you, as a shareholder of the corporation, borrowed money from your corporation. Typically that sort of general rule is that the amount that you borrowed has to be repaid within two fiscal year ends or the entire amount you borrowed is added to your taxable income.

But in this scenario where your corporation is lending money to someone who has no share ownership in the business, has no ownership interest at all in the business, well you're as the shareholder, you're no longer subjected to that rule that I just described because your corporation can treat you no differently than Joe Blow who borrowed the money from your company as well. So you now you take out the loan and you set up a five year repayment schedule.

It has to pass an acid test of the corporation's motive to earn a profit on that transaction. So if your corporation only charged you because you're the owner and you say, hey, I call the shots, I'm only going to pay 0.25% interest on that loan.

Well, you, A, you're going to get audited and B, understandably so. They're going to say, look, you didn't even charge the minimum prescribed interest rate. Shocker that the government prescribes, things like that. But if your corporation charges you 10%.

That'S well above the minimum prescribed rate. And so now you start, you pass that acid test of the transaction, having a profit motive. Make sense?

Yep.

And, but like Richard says, plus you.

Wouldn'T want to be yelled at by Nelson about stealing some peace.

Totally not going to happen. Yeah, not going to happen.

But like he said, I mean, obviously speak with an accountant and make sure that the accountant you're speaking to has a degree of knowledge and expertise in the tax treatment of loans. When you take into account that there are other parties borrowing from the corporation who are not tied to the corporation. And that was a distinction that I didn't know until my accountant educated me on that because I said, look, if I'm going to borrow money from one of many corporations that I have an ownership interest in, I don't want to be subjected to that constraint of having to repay it within two fiscal year ends maximum. He said, well, provided the corporation is lending to other individuals or other corporations, you're not subjected to that rule. The corporation can treat you as a borrower no different than any other legitimate borrower. And so that's something. Unless the tax rules have changed, which has not been brought to my attention. That's something that was shared with me by my accountant who's been working alongside me the past 13 years.

So, I mean, this is glorious. Thank you. The issue has nothing to do with the policy loan and the corporation. It is corporate money going to the, to, to somebody. So the fact that there's a policy loan involved in this scenario is irrelevant. Doesn't matter.

Correct. Right. Yeah.

Okay. That's fabulous.

Isn't that good?

It really is the horizontal line and you have corporate world and personal world. And as soon as you cross that line with money, something's got to go down. That's basically the summary and it's how are you verifying, proving, tracking, documenting. Yeah, when the money crosses the line, whichever direction it goes, if it's going from personal up to the corporate or corporate down to the personal, there's someone wants to get in there and grab some tax. Now, additionally, if you personally lent money, let's say you have a personal policy, you don't have a corporate one yet. So as an example, we have people who have holding companies and trusts and whatever. And they have their operating company. If their operating company maybe has a bunch of risk associated to it, maybe there's some liability they're concerned about, perhaps they won't want to have a policy in that corporation right now or they have a plan on selling it. They have a plan on selling it. You don't want to sell that corporation if it's got an insurance policy in it. You have to purify that corporation so that the insurance has to exit it. Or you have to set up a new corp, move the operational assets over so that this one becomes a hold code, if that makes any sense. The insurance policy. Someone buying that business doesn't want to buy your cash value, buy your insurance policy. And if you're doing a good job with that policy, you don't want them to buy it either. So you want to separate those two things. Do you want to do it early or do you want to do it late? Is often one of the things. If you don't really have a salable business or your plan isn't to sell, it's to wind it down later, then perhaps that's not a contentious issue for you.

Yeah, because you can convert, you can convert the operating company into a hold code down the road.

Down the road and you can say, yeah, we're going to wind down, we're going to sell off equipment, you know, computers and the employees and the website, the website in the name. And we're going to do an asset sale versus a corporate sale. So again, how people buy and sell businesses comes into play there as well. So there's a lot of moving parts there that I'm identifying. But just you know, in, in, in general terms, most people would consider, hey, we're going to do the insurance policy, we're probably going to have it in a holding corp or not necessarily in the operating company or at least that's the goal eventually to go that route. So now if you're lending money, let's say you have a personal policy and you're lending money to your operating business because you, it needs, has an equipment need. So maybe you, maybe instead of lending money, what you do is personally you buy the equipment and then you lease the equipment to the operational company. Now if you're doing that, you're, you're going to be receiving a payment personally and you're going to have again a profit motive most likely. And you would have to claim that profit as income on the personal level. Again, we're not tax professionals here, just at A high level.

Totally, totally.

You know, you can see how. So from the personal side, you could use it to help grow your business because your business is a captive customer. Nelson talks about having a captive customer in the book. And so if everything that your business does is to generate revenue and money for you and your family, what's the difference if you and your family use your own personal resources that you're getting from that business to then captivate that business for further extraction of money?

No different than behind you boys, your home office. Similar kind of concept, right?

Exactly.

Right. Yeah. So I mean, I think just for in case one of your, one of the listeners or many of the listeners don't understand, why would anyone set up the corporate versus the personal? It's very simple. Personal taxes. In my situation in Ontario, when you start making some decent money, your marginal tax rate caps out at 53.53%.

I mean that's not aggressive at all. 53% of every dollar you earn.

Why would it mean this sucks.

But we, we agree this is awful, right? Like this actually sucks. And so for the extra 100 grand you're going to make above a certain number, you're going to keep 47,000. That's tough to stomach. But if that, if there was an opportunity for me to earn that money in a corporation instead, and it's a Canadian controlled private corporation, I own the shares. That corporation is taxed at 12.2% for the first $500,000 of income. Given the two scenarios, I have a lot more after tax dollars to, from which to buy my or pay for my premium in the corporate structure. And that is the reason why the majority of us with corporate policies choose a corporate policy.

Just few other ingredients I'd put into that pot. You know, with the policy being fully exempt from the passive investment income tax rules.

That is, that is a significant advantage to companies that are generating surplus and they need somewhere for that surplus to reside. Surplus meaning positive net income. And that positive net income is not being solely distributed to the stockholders in the form of dividends where the stockholders are saying, look, we've got a million in positive net income, but we only want to distribute 300,000 to the stockholders. We got to do something with the remaining 700,000. It has to reside somewhere.

You can't hold it.

What better place to have it reside than in an instrument that is exempt from the passive investment income tax rules? And you pay no tax on that daily buildup of cash value and the death of the life insured gives rise to the capital dividend account credit, which we have a whole great episode on. We can maybe put a note in here pointing someone to that great episode where we really expand on it. But the advantages are quite clear and quite distinct between Canada and the United States. In the United States, they don't have to reckon with capital dividend accounts or passive investment income tax rules or things like that. But there are some very distinct advantages to corporate owned life insurance. And as evidenced by the fact that our, our corporate owned life insurance owners.

Can'T get enough of it. Understandably so.

Right.

Once they understand the attributes.

Donnie, you know what's interesting?

Tell me.

I've talked to a lot of.

Mps.

Not one of them has been able to tell me.

What mine or yours or Richard's fair share taxes are.

Even when I like wholeheartedly suggest take all the time you need, just get back to me when you get a chance, let me know what that number is. Because if you're in a situation where you earn a level of income where you're subjected to a very high amount of taxation.

You can also look at.

That through the lens as being something positive.

Hey, wow, I'm in a position where I've triggered a significant taxable event. That means that I've done something that has created value for someone else. And then I've got some, you know.

Government.

It comes with liabilities.

I'll just.

Some individual.

Can I, can I say it for you or not?

You're more than welcome, but I'm not going to. It's, it's all this element of, well, what is, what is fair share exactly? How does that relate? And, and the point being is that business owners, the three of us, can relate. We really like capital as a tool to create value for other people and to grow our business by gainfully employing people who are going to pay taxes by purchasing business equipment, going to pay taxes to purchase by putting technology and systems and resources in place. And we just want more of that ready access capital to, to repeat that cycle and keep doing more of it. Whereas I was just sharing this yesterday. When you look, when you watch a movie for all of our viewers, you're on YouTube and you're. And you hop over to another platform to binge watch your favorite movie or sitcoms. Anytime a wealthy person is in any of those films, they're always portrayed as the villain.

Anytime. Pick any.

Or the slumlord real estate guy is, yeah, pick anytime.

And the wealthy person, the successful business owner is portrayed as the villain in the film. Whereas if you could spend the amount of time that I do with people who, like we, we have a family group of companies that generate several eight figures of revenue a year. But when I associate with people who are in the nine figure category and they're grounded, they're some of the nicest human beings that you'll ever meet. And they understand this tool. Oh, yeah, yeah, yeah.

You be your.

Yeah, you kind of build your own system and you, and you control that function of banking. Yeah, that makes perfect sense to me. They get it like that. They're not saying. But what about buy term and invest the difference? Well, what the hell does that have to do with controlling how you finance the things that you need in lifetime? Take all the time you need to share that with me. Well, what about my mutual funds, my 401ks? What the hell does that have to do with controlling how you finance the things you need in life? Take all the time you need to explain it to me.

Like Ramsey would explain it to you. Ramsey would tell you how the savings that you make or you keep, when you invest the rest, you earn 12% per year, or 13, what is it? And you just keep going with that boom.

He must have a horseshoe shoved up his butt or something because I've yet to meet any of these people who made that 12% a year. Have you. You know, Donnie, you're doing seminars and stuff now. You meet people all the time. I'm guessing these kind of questions come up. Have you met anybody that's. That's hit the home run on the, on the Ramsey plan of buying an investment?

No.

I think what he really means to say is you buy this thing that temporarily protects you so that you, you risk the difference, and you risk it in such a way that eventually, even if it does work out, it's all taxable and someone's going to get half of it.

Yahtzee.

That's the model that he's promoting.

The whole point is all those, Everything outside of this is taxable for the tax.

Okay? I'm not trying to exploit anything or mislead anybody, but there are differences in the way the wealth is treated. Your capital is treated in an insurance policy and not an insurance policy. One involves taxation, the other one primarily does not. For the most part, you can structure it so that it doesn't.

Right.

That difference alone, all things being equal, even if there was a reduction in how fast your wealth grows in an insurance policy, the bottom line is, after tax, what is the difference? And if you went to that level, if you went granular to that level, it wouldn't even be a discussion.

Not even close. And here, here's the other, here's the key that I was getting to is that if you set the whole tax discussion aside and, and you hear someone, whether it's, you know, this, this Mr. Ramsey fella who makes comments like, your income is your greatest wealth building tool.

Your income is the banker's greatest wealth building tool. Let's just clarify that. Because what never gets mentioned is that your money must reside somewhere.

He has very strong opinions about where it should reside, but he's not describing who's controlling the use of the money.

And so when you understand the problem, the solution matters to you. That's why when people, when people are first introduced to this concept and unless they understand the problem, the solution just won't matter because their brain goes to comparison mode because they, they, they lean toward things that they already have some degree of knowledge of. Mutual funds, 401k stocks, Bitcoin, real estate, et cetera. And then the brain goes, how does this compare to these other things that you've already developed some degree of knowledge of? Well, how do any of those things help you control how you finance the things you need in life? Let's get back to the problem so that the solution will actually matter. And that's where the light bulbs go off for people, where they go, oh my God, I wasn't thinking about it that way.

There's a page in, in Nelson's book, Rich, you're always amazing with pages. So I'll just, I'll do the scenario. You can come up with the page where he's talking about, there's that guy and he's, he's the all American guy and he's creating this whole product or, or just figuring out his money, how much, where is his money going? How much does he get to keep? And he goes, if you get nine, nine or 10 friends together, the topic will always be talking about what is left over and the rate of return on that small number, rather than considering all the numbers that went before it.

Yep. So, so Nelson is, that's actually the page that's called the problem. I'm say it's. Yeah, it was right after the grocery store example, page 17. So literally Jason's talking about not understanding the problem and the depiction of the all American young man and where the flow of money is, is explaining what the problem is that everyone's dealing with.

Yeah.

And he's just doing it at the level of a person that's the all All American, average young man is how he was doing it. And so wherever you are, maybe you're older, maybe you're younger, maybe you're above average, maybe you're below average. You pick how you want to measure. It doesn't really matter. It's really just a matter of scale. So if you think you're above average and maybe your income is drastically higher than that individual, again, the book was written in like anybody reading the book today, making an average income in North America is above that individual because the average income's gone up. So everyone is above average relative to that. But the condition that we find ourselves in hasn't drastically changed. Now what's also interesting that you point out in that book, Donnie, is he goes through the graph of how, how money is spent on people and the ways that they buy cars. And he also goes through where the, where the money flow is and how much goes towards housing, how much goes towards this, and he credits the average individual as putting 10% away. Well, at no time in my understanding of Nelson, when Nelson would used to deliver this and do seminars, he was very aware of what the average savings rate is of the typical North America. The typical, you know, American at least. Anyway. Now that does vary to a degree, but it's virtually never been 10% since the time that this book was written. And if anything, it's gone way down because the inflation, the cost of everything and blah, blah, blah. So, so the savings rate is actually plummeted drastically and he's basing all of it on being able on, on a person saving 10%. He's giving people a positive outlook on what life is like, not the actual outlook of what's really going on. And so the need that he's describing in the Problem is actually. So if you imagine the savings rate is 10% that he's showing, but the saving rate is actually 5%, well, that means you have a 50% greater problem than what he's depicted. Does that make sense?

Agreed.

Right. So, so, and then if the Savings rate is 2 and a half percent, well now the size of your problem is drastically bigger at an exponential level because the limitation of how much you're putting away relative to how much is flowing out the door. So we really clear on the percentages of what's, what's savings versus what's disappearing. Now you can really see the scale to which the problem affects you.

We're wasting time talking about the return of what that two and a half percent that's left over, whatever that's generating and we, we keep chatting on that and we're ignoring what we could be doing with this massive pool before it gets, before it leaves our fingers.

Well, Nelson talks about the airplane example and the headwind tailwind scenario. One of the things he talks about with the airplane example is, hey, if you got rid of the wind and you're flying in an environment where there is no wind and you're flying at 100 miles an hour, that's depicting the 10% savings rate. And then, hey, you're going to hit your destination at exactly on time. But what everyone in the world is doing in the financial world is they're trying to get your airplane to go faster. Let's get it to go 102, 103, 105 miles an hour, 110 miles an hour, and we'll get to our destination faster. In other words, take on more risk, invest more, put more into the market. And so people are striving for that thing. They're trying to squeeze more efficiency out of the airplane. But when you do that in an actual airplane or a person's life, the, the relevant point is it's your human life that we're talking about here. Well, you put stress on the airplane and then the airplane needs maintenance and it, and it, it might, it might crash and burn early because of how much stress you're putting on the engine. Well, that's what happens to people at the physical level when it, when they're trying everything they can to get out of debt and then to try and make their money, earn more money by chasing returns. And the result is it doesn't always work and the plane ends up being grounded and it's in for maintenance for a year while they're recovering because they stress the engine too much. In this case, you're the engine. Does that make sense?

Really get it? And if you change, instead of changing or engineering that the aircraft, if you, if you, if you engineered the environment changing everything now you don't have to.

Make the aircraft go any faster. The environment is working to your benefit.

Yeah, that's precisely what Nelson was trying to get across. He, his ability to frame things with very easy to understand analogies was just brilliant and it just helped you to really again examine the simplicity that of the fundamental truths. Right. Your money must reside somewhere. Someone has to perform the function of banking as it relates to your needs. Everybody banks. And so there are no exceptions. It's just a matter of who is the banker in your life as it relates to your needs. And it can and should be you and.

People just want to complicate that. Well, show me the policy design. Show me the numbers. Show me the dividend scale, interest rate for the next 428 years so I can make a decision. Like, most people can't think past this weekend and they want to examine all that other stuff.

I'm laughing. There was a dude on Twitter or whatever.

And how do I say this?

There. There's a whole bunch of people with three letters after their name that despise whole life insurance. And they're non. Ramsayists. They're just people who believe it's the worst thing you could possibly put your money towards. And I. These are educated, trained professionals. Okay. Like, it's not an easy three letters to get after your name. And just the level of unsophistication, if you will, that they have towards conceptualizing or figuring out ways to really apply whole life insurance policies. It's just that connection is. Is off. And I don't. And I. I've struggled to understand how you could be so intelligent, like have such intelligence, but be so unintelligent at the same time when it comes to this. So I know I can't change everyone's opinions. And they clearly, there's no way that they've done the research that you've done that I've done to really understand how this works. And they've just discarded it because someone who they probably held as a mentor or someone who knew more than them said that whole life insurance is a scam. That's it. Period. And there were loads of policies that are not wonderful. They weren't designed wonderful. They were designed for. For whatever reason could be the insurance agent who was commissioned chasing or didn't know any better. Even Nelson had an insurance policy from his brother that was not fantastic. Right. Like, so even Nelson didn't know at one point.

That's right.

I struggle in that, on that forum, in that community.

To just to hear that because I feel like it's. And I've called somebody out. I feel like you're taking away someone else's. Some innocent person who hasn't yet to make a decision or haven't been educated. You're taking away their ability to ever see a possibility for themselves using this. And that makes me angry. That makes me angry. And I've seen the. Some of the comments. I'm on your. Obviously I'm on your ads, Jay, so I get those. And I see some of the comments from people in your episode on Susie or whatever her name was. All this stuff just it bugs me. I'm sure it must bug you that people are robbing others.

Of the freedom of thought to get to a better outcome. And I just want to say that with you guys, keep doing what you're doing because we need you.

Well on that note Rich, well we.

We appreciate that Donnie and I appreciate you gave us amazing copy of this book. Replace your salary with real estate. I highly encourage everyone to get a pick up a copy of this book. Donnie goes over his five step method for doing that, the replacement method, the, the mangoes way, which is great. He has a great way of explaining and highlighting really what the core what is an investment and how ultimately it's a reward for giving up the right to use your own money. And you should be expect that. But you have to have delayed gratification in doing so. So you, you really pinpoint a lot of things and a lot of great similarities to Nelson talking about Parkinson's law and the importance of having the ability to recognize delayed gratification in a book. And you go through great examples of different ways of investing in real estate. And you also have some good stuff on taxes in here around RSPs and of course your take on the resps. So phenomenal book. Everyone should have a copy of Replace your Sally with real estate by Donnie Mangoes. Now Donnie, maybe you'll share with us where they can pick up a copy. What's the best place for people to do that? And perhaps we could put a link down below into the show notes as well. Where, where should people get a copy of the book you got?

Well, it's, it's a former bestseller on Amazon. So it's still on Amazon. Absolutely. All the major platforms. It's on Audible as well and Kindle. If you go to replace your salary ca. That's me. I'll even send you a PDF version to your, to your clients guys or your listeners. Click on that press get the book or whatever it is. Off you go. Love it. Yeah. So I'm happy to share the message. It's not a real estate book, so truth be told, it is not a real estate book. It's a personal finance book that does involve real estate as a tool in that book. Just like insurance is a banking tool. Um, so thank you for the, thank you for the plug guys. I appreciate this.

Now, pleasure having you and with that in mind. Donnie, of course we've asked you this before but I'm curious. Since you've written this book, you have another one in the works and now you've shifted a Little bit. And your focus is really on delivering a personal finance and empowerment message to people through the use of the seminars that you're up to. What's. What's shifted and changed for you? Who is it now that. That you most want to be a hero to?

Great question.

It's a demographic that really resembles me. It's a family. Okay. It's a family.

Parents, kids have a need for generational thought, generational wealth. The world's not getting any cheaper. I've seen that. Like my ability to buy properties when I was aging, it was achievable, and I could take calculated risks. I don't see that kind of future for my kids. So I live in the real world, and I see how difficult it's going to become. So who I want to help are people that are going to have kids that are going to struggle the way that mine would have struggled if I didn't take care of things. Now. I want people who are committed to being educated, people that are willing to listen, willing to be coached, and willing to consider alternatives beyond what the banks got on a sign when you go make a deposit at the atm. So there's just ways you can do things that are different if you allow yourself to be a free thinker and a critical thinker at that. So if you go to ReplaceYourSalary CA and you wanted to get on a mailing list, no problem. We'll add you on there. I will create a waiting list for the. Replace your salary with the new real estate, which is going to be a lot of information that you guys also share. So I want to be a champion to somebody that is un dissatisfied, you know, in your 40s, and you're dissatisfied with. You're not where you thought you'd be. And Scotia bank tells you you're richer than you think. I don't. I don't agree. I think you could be richer than you think they are if you just. They are. If you just did things differently, you might even, like, look at this guy. He's like Benjamin Button over here. You might even be able to pull off Jason Lowe aging in reverse when you start using insurance.

Well, thanks so much, Donnie, and to all our viewers on the YouTubes, you made the right decision watching this video. Continue your journey of learning. You'll see another video that popped up courtesy of our editing team. And we just. We will always continue to share that there's no such thing as having arrived in knowledge. So we curate these videos especially for you. So continue that journey of growth and learning. And to all of our listeners on whatever podcast platform you choose. Thanks for listening guys. Have an outstanding rest of your day.

Thank you boys.

Thanks for listening to the Wealth Without Bay podcast where your wealth matters. Be sure to check out our social media channels for more great content. Hit subscribe on your favorite podcast player and be sure to rate the show. We definitely appreciate it. And don't forget to share this episode with someone you care about. Join us on the next episode where we continue to uncover the financial tools, strategies and the mindsets that maximize your wealth.