Get Rich Education
Real Estate Investing with Keith Weinhold
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Why High Salaries DON'T Create Wealth, Why Western US Homes Cost More than Eastern US Homes
• 36 minNo one gets wealthy from a high salary. Wealth is acquired by owning things. But how can you own MANY things without much money? I discuss it. Learn how to use major banks (Chase, Wells Fargo) to fuel your wealth and retirement when you’re young. Debt is like fire. Kids will burn down the house with fire. Adults will use fire (debt) to produce prudent leverage and outsized returns. High salaries don’t create wealth due to: lost time, no leverage, few tax benefits, and entrapment due to sunk education costs. I sat down with a conventional financial advisor. Things got interesting. Learn why Western US homes cost more than Eastern US homes. This fact confounds most real estate pros. I break down 8 reasons. Resources mentioned: Show Page: GetRichEducation.com/497 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments. You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold Complete episode transcript: Welcome to GRE! I’m your host, Keith Weinhold. Don’t make this giant wealth mistake - understand why a high salary does NOT create wealth. Learn what does instead. See how to get deep pocketed-banks like Chase & Wells Fargo build wealth for YOU. I recently sat down with a traditional financial advisor - this got interesting. Then, why do WESTERN US homes cost more than EASTERN us homes? All today, on Get Rich Education. Welcome to GRE! From Port Jervis, NJ to the Port of Bellingham, WA and across 188 nations worldwide, I’m Keith Weinhold and you’re listening to Get Rich Education. Welcome in! When I grew up, I thought that people got wealthy from high salaries. I figured that I could get wealthy if I got a high salary too. And then adulthood has proven to me that… they don’t. People don’t get wealthy from high salaries. They get wealthy by OWNING THINGS. Let’s break this down. People DON’T get wealthy from high salaries. In fact, have you ever seen THIS happen? I haven’t. I worked as an employee in both the public sector and the private sector, and I’ve been a longtime real estate investor and entrepreneur. In fact, how would anyone even GET wealthy from a high salary? If you’ve got a job… you’re trading your time for dollars and selling your time for money. I used to do that too… and I actually think that everyone might get some perspective by having a taste of that. Most get that taste. And say you’re even entrenched in the game of climbing the corporate ladder, to a higher and higher salary. Well, first, in my experience, many job promotions get you perhaps 10 to 30% more in salary, but 2x to 4x the responsibility - that’s 200% to 400% more responsibility. Even if there’s an edge case here, in your situation, in climbing the corporate ladder - where does that even get you in the end? Look at your supervisor and their lifestyle. Is that what you want to be? Look up higher at your supervisor’s supervisor. What’s their life like? Is that the life that you REALLY want? Is that what you aspire to be - and expend so much of your most precious resources to get THERE - time, time away from your family, energy, skill, potential. Is that really it? The answer is right in front of you! People don’t get wealthy from high salaries. People get wealthy from OWNING THINGS. We’ll get more on how - if you have average means - on how you can OWN MANY THINGS shortly. But first, let me address any more hangups you might have if you still think that high salaries can create wealth. We won’t even look at, sort of, common jobs like an IT specialist or a systems analyst or a plumber. Let’s take an edge case - a classically, high paid profession - a doctor, a surgeon, a specialist even. Highly compensated - several hundred thousand dollars in salary each year. I know some of them. I also know a bunch of RESIDENT doctors too and I talk with them - they’re basically, finished with their formal schooling and are doctors-in-training. They are repaying loans deep into the six figures after undergrad pre-med and after a few more years at medical school - often it seems to be $300K to $400K in debt that they have to pay back in the case of these resident doctors. But that’s besides the point. It’s common for these specialist physicians, once they start working, to work as a doctor for, say, 58 hours a week… or 71-and-a-half hours a week. Now I said that high salaries don’t create wealth. How wealthy are you, if after undergrad, med school, and three years of low paid residency, you finally get out, you’re in your 30s or older, and you’re working 60+ hours a week. 60+ hours a week is not MY idea of wealth and freedom at all. You know what else, when you’ve pursued a specialty track like that, which often comes with loads of debt, you are in so deep - you’ve invested so much time & energy & chapters of your life… and DEBT into that field you CAN’T pivot to another career, even if you wanted to. You’re trapped. Entrapment is the very opposite of wealth and freedom. Understand, I just went out and gave an example of perhaps the highest salary type of person that I can think of… to help prove my point. Where’s that leave you? And you’ve probably heard… the “end game” trope… about climbing the corporate ladder by now. Yep, you spent the best years of your life climbing the corporate ladder… only to find at the end… at the top… that the ladder was leaning up against the wrong wall the whole time. Because high salaries don’t make people wealthy, then how do people get wealthy from OWNING THINGS? There are two main ways: #1 - You can launch and own a business. #2 - Real estate. Now, launching and owning a business takes a ton of entrepreneurial ambition, risk, and you’ve got to have a novel idea - a NEW idea - that creates value for the world. This can be a worthwhile venture… and successful entrepreneurs create value for the world with their own business. It’s terrific! It’s capitalistic! It’s turning lower use resources into higher use resources. But unless you have your own money, you’re going to have to be scrappy and resilient for a long time. Because it’s really hard to get loans for a new business. If you hire anyone to help you, you need to quickly produce enough income to have leftover profit - paying your overhead expenses, software subscriptions, paying your help… and having enough leftover to fuel your own lifestyle. Household names like Apple and Facebook are one-in-a-million. You don’t have to be an Apple or Facebook. But it’s tough. The first way is by owning a business. The second way is by owning real estate. New businesses are unproven. Real estate is proven. Like I say, wealthy people’s money either starts out in RE or ends up in RE. But how do you OWN much real estate? Because RE is expensive, and wealth is created by OWNING things. With prudent loans. Because RE is proven, banks will GIVE you loans. Lots of them. Have good credit, be credit worthy. And… being credit worthy should be an innate trait in any virtuous human being. Because it shows that you repay the debts that you owe. I think that when it comes to debt, debt is like fire. Don’t let a little kid play with fire. They’ll burn down the house. Leave fire to adults. They’ll use it to HEAT the house. Leave debt to the adults. Use debt to fuel your lifestyle, fuel your ambitions, and fuel your opportunities. To the scarcity mindset of “all debt is bad”, here at GRE we say, you’re an adult. Grow up. Learn… that debt is Leverage… and your debt isn’t paid back by you at all. Tenants and inflation both RELENTLESSLY and INCESSANTLY pay it down for you, until they pay it OFF for you… if you want. So then, who’s really funding your wealth, enabling you to own things? Who really funded my wealth from nothing, enabling me to own things? Who funded my retirement? Leverage… from Chase Bank, Wells Fargo, Bank of America, and other banks. They all give you the opportunity to let THEM fund your wealth for you. Now, I’m going to explain a core GRE principle here. But so that this isn’t repetitive for the longtime listener, I’ll use a NEW analogy for you, here. Look, let’s say that you’re a kid. You don’t know how to responsibly use fire or debt. In fact, you’re still just 4’ tall. But learning about leverage is like… seeing the light. Now, with the sunlight, a 4’ tall kid can now cast a 20’ tall shadow. You look like a giant now. 5-to-1 leverage made you, not just grow up, but grow into a giant. You suddenly wield the power of a financial giant thanks to the banks. Because with your 20% down payment, you're only putting up one-fifth of the property price. How then, do these big banks make you a giant? Let’s say that’s your $40K down - on a $200K income property, when the property appreciat
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