Day 1 session 2

All right, we're live. We are back after lunch. We closed down the VIP room and we are going into session three. Um, we're going to really start digging deeper. Each level is going to get deeper and deeper and deeper and uh, we might go a little deeper than I should take you in a short period of time, but I think you can handle it. That's why I'm going to give it to you. Probably a little deeper than we should, but it's okay.

Now, uh, you know, these are sessions that I've designed for my coaching clients, and I'm trying to cram it all and give it to you. Um, as you can tell, this is not one of those, uh, this is certainly not one of those like events. I'm sure anybody ever went to like a hotel event or whatever on like real estate, but the whole time they're just trying to sell you something. Um, you can obviously tell this is not that. Like, I'm giving it to you. I'm giving you my tools. I'm giving you the train. I'm giving you the numbers, the whole thing. Um, the reality is you can get the information. It takes a while to fill it out. Uh, Drew, can we get the screen back up over here, please? I don't have it over here.

>> Um, so we're going to keep going though cuz I know you can handle it. Anybody like that uh motivational tracks that we were playing? Anybody like that? Give me a give me a muscle up in the in the chat if you if you do. That's what I listen to in the gym every morning. I got I got I got days and days and days of that stuff. I'm going to keep playing it for you guys. Get you guys ready to run through walls. Uh, so we'll keep playing that.

But in session two before lunch, you classified your assets, what was collateral, uh, what was productive, lifestyle assets, dead weight assets. You you needed to know what you have, what you own, right? Take inventory of that. Now that we have inventory and now that we've classified it, the next question is how fast can you access liquidity? How fast can you get access to liquidity in those assets? You own it. So we talked about high value, high control. If I control it, how fast can I access it? Because not all collateral is equally liquid, right? We talked about this shortly before the last session. Not collateral is equally liquid. If we map this out, we understand that net worth and liquidity are two different things. Right? Going back to again, if you watch my YouTube stuff, you know I talk a lot about global liquidity. It's one of the main metrics I look at, not the only, but one of the main metrics I look at to understand where asset prices are going. So, when the central banks are easing, when they're pumping more liquidity in the system, it's like a bathtub filling up with water and the asset prices rise. But how do we measure it? That's one of the questions everybody asks. And there's really the goat, the greatest of all time in global liquidity is is is Michael How, I believe. And he has his own proprietary way he tracks global liquidity. Uh, my friends over at the Bitcoin layer, Nick Bia, they have their own metric. Uh, Ral Paul over at Realvision, he's got his own metrics. And they're all working somewhat similar, but they're all sort of proprietary because it's not just the amount of money. They have to look at all the available access to capital and credit that could create the liquidity. So you look at like um, the slooh reports for example, you look at you know, banking risk um, profiles for example, right? And we want to understand how quickly could the money supply expand because obviously when things are more risky, banks will lend less, which means less liquidity. When things are good, banks lend more. So total liquidity is not cash in the bank. That's the key piece I'm trying to make. Global liquidity is not cash in the bank. Liquidity is how much access to liquid capital do we have?

So let's let's run through two scenarios here to understand net worth is not liquidity. Crisis scenario. So a lot of you had pinpointed after the last session that one of the single biggest points of failure for you would be that if your income stopped, if your income got disrupted or something like that, which is the main risk for most of us. If my income stopped for 12 months. So let's let's look at two different people. Person A, person A is burning through $100,000 in 10 months. They must sell liquid assets or I'm sorry, must sell illiquid assets at distressed prices. So, let's say that they have, you know, they have a lot of net worth, but they don't have the money. They need the money and so they have like commercial real estate, but it could take like 6 to 12 months to get access to that. They have private equity, but private equity is locked up for five years or seven years. They can't access it. So, so what happens? Well, now they're forced to liquidate whatever they can get. Maybe at discount prices, maybe at a 20% discount, a 30% discount. I wouldn't want to be forced to liquidate my Bitcoin today when it's whatever at 90. I want to wait till it gets back to 125. I don't want to sell at a 30% discount, but if I need the money, I have to.

But person B, hey, what's up, Kim? I see Kim joined us. Hey, good to see you. All new stuff here, Kim. All new modules for you. Um, so person B, they're forced uh I'm sorry, per person B, they use different layers of assets that have different liquidity measurements. So let's say they have layer 1 and layer 1 covers let's say 3 months, there's about 30 grand there. Layer two covers 9 months and let's say that's about 90,000. Layer three is like untouched capital. Let's say there's like 450,000 held as the final line there. So now this result, if they ran into this liquidity or this cash crunch, they lost their job, they could survive 12 months without having to sell. And again, this seemed to be the single biggest point of failure for most people. So how many of you are closer to person A than person B? Person A, give me a thumbs up in the box. Person A, how many people got person A or an A? An A is good. Yeah. A A A. Yep. Okay. So, that's our single biggest point of failure. The good news is we've identified it now before the risk comes up and we can fix it. That's what we're going to fix today. By the end of this session, you will know you will know exactly what your liquidity ratios are.

Okay. Now, how we're going to build this out, we want to understand that layer one is like our operating buffer. This is the money we need to operate, to stay running, you know, to make payroll on a regular basis, to buy my groceries, to pay my rent, my operating buffer. Layer two is then emergency reserves. These are different things. Hopefully, emergencies don't come, right? So, I need some liquidity to to stay liquid to stay my operating some of it. Then I want to be available in the case of emergency, but I don't need it for operating. That's emergency reserves. Layer three is then my asset-backed liquidity and layer four is my illiquid assets. Now all of this is assets. Not all assets are collateral and not all assets are liquid. You guys are following me. Layer four is what builds our wealth the most. Layers one through three protect our wealth. What you'll leave with is a four-layer liquidity map with a liquidity ratio survival metric and an action plan to strengthen layers one through three. As I kind of said before, I have a proto tool kit right here. You need to fix a car. You're like, Mark, what tool should I use? I don't know. What job are you trying to do? The mistake that everybody makes, most people make, sorry, is that they think that all all assets are equal. Mark, what assets should I buy? I don't know. The truth is I need a range of assets for different jobs that I'm doing. Do we have any mechanics here? Any mechanics? I don't know much about mechanics. Sorry. But like I know I have some like tool sets that I just bought recently and like they have like a whole bunch of like sockets and some are like real long sockets and some of them are like real short sockets and some of them have like uh what is like a quarter inch driver and some are like three inch drive. Why why do I need so many stupid sockets? Well, for different different jobs, different use cases, right? Race car driver and no mechanic. How how do you do that, Josh? I thought I thought you have to be a mechanic if you're a race car driver. Okay, let's keep going.

So, first let's talk about the operating buffer. All right, so this is this is layer one. Now, the definition of this I'm putting this definition on. Go ahead and adjust this for yourself. Someone in the VIP room earlier was asking me, "Hey, Mark, you said that u we should never borrow against if it's less than 30% LTV." I like, "Whoa, whoa, I I didn't say that." Uh, I was giving prompts to get you thinking. There's no hard and steadfast rules on any of that. Here's how I'm thinking about it. And things change for me from time to time, but my operating buffer is again, this is the money I need just to operate. I need to pay my rent this week or my mortgage. I need to pay my insurance. I got to go to the grocery store. I got to pay gas. I got to make payroll for my business. Whatever. So, I typically think about one to three months. And I usually keep that in my bank account, in my checking account, because it's like money's coming in and out all the time. Boom, boom, boom, boom, boom. One to three months of expenses in my checking account. Why? I want that there. We always want to know why. So I can pay my bills without friction. I'm eliminating the paycheck dependency. Money can just kind of come in and out. My bill pays set up, all of that. We're going to talk about that a little bit more later because there's better ways to do that. But I want to keep about again one to three months of liquidity in there. Depends on how my income comes in. Do I get paid on a two-week basis or is my income more chunky? If I'm a self-employed business owner, an example would be like, you know, let's say that my monthly expenses are $10,000 a month. I might want to keep 20 grand or 30 grand in that account because I want instant access to it. This is not an investment account. This is not an emergency fund account. This is not an this is not a savings account. This is my operating account. Now, we have a whole course on optimizing income to increase the amount that our cash reserves make us. We're not going to get into that today. Um, layer one is not, like I said, it's not an investment. It's not for opportunistic purchases. It's like, um, this is the gas tank, and I want to keep my gas tank full. How many of you guys guys like to drive around with your uh light on? Your gas light on. No, Kim doesn't want to run out of gas. How many have ran out of gas before? It sucks. We don't want to do that. Um, so it's like keeping your gas tank full.

Okay, then layer two is my emergency reserves. Now, this is different. Okay, I need to keep cash in case an emergency, an unexpected expense comes up because I don't want to be a force seller, right? We talked about that before. Hopefully, you guys were here in the earlier sessions. Never be a force seller. So, I need to have some buffer. I get sick, I get hurt, I get in an accident, whatever happens. So, what I want to do typically is like this would be stuff that I might want to have up to 3 to 12 months. So if my if I lost my job, if I couldn't work, if I couldn't whatever, I might sleep well at night knowing I have about a year of like I could I could live for like a year without having to start liquidating assets. So I I don't and I want to be I don't want to be have it all in like a private equity fund that I can't access for seven years. So I need to keep some that's available to me is my emergency reserve. So let's say that my monthly expenses were $10,000 a month. My layer 2 target might be 120,000. 3 to 12 months expenses in a high-yield liquid instrument. High yield. I don't want it in the bank earning 0% interest. So I can put this into something that's a little bit one lever up. Cash is a zero to one vault asset. So it doesn't move up or down. Treasuries are like a one to four. Treasuries go up and down a little bit. I could put it into like treasury bills making four or five percent. I could put it in money market accounts making four or five percent. I like stretch STRC right now it's paying 11%. So I can put it into something like that. So if I had if I had that buffer the 10,000 a month times um times say 10 months or call it a year 12 months is 120k. I could put it into stretch and that makes me 13 grand a year but it's instantly liquid. Well, not instantly. It might take me two days. It's not instantly. Like, it's not on my checking account. I can't swipe my debit card, but give me two days. I can have it. An example of a rule that I would use here would be like, I'm going to maintain at least $120,000 in a high cash value uh instrument before I deploy it into illiquid investments. So, should I go into this private equity, this private venture? Should I buy this commercial piece of real estate, this apartment complex? Well, I don't know. Do I have this set up first? Also, I will never borrow at 12% interest if I'm have if I have cash earning 10% interest because I want the cheapest access to capital. I think about this emergency reserve. I want access to this capital within seven days. I don't need it right now, but I I need to have quick access to it. If I get hurt, I go in the hospital, I got to pay something, like emergency pops up, I'm going to get liquidated on a Bitcoin stack or position or whatever. Like, I need it within seven days. When to use it? Well, like again, so the market crash, I got a margin call. That's an emergency. I lost my job. I need to get some money for a couple months. Um, right? I need to make insurance deductible, whatever. Imagine. So, uh, one of the one of the I think it was in the VIP room, somebody said that, uh, or maybe it was before we went to the VIP room, I forget now. Um, someone said that one of the biggest risks they saw was that they had put so much into Bitcoin and levered it up and they thought they were fine, but when Bitcoin dropped 30%, they found themselves stuck. And if it had dropped a little bit more, they would have got margin called. So, let's say that you need a h 100,000 in 7 days or you're going to get liquidated. So I could get that cash that's earning 11% right now and pull it over and and and save myself from getting margin called. So that that 11% is productive defense. I mean, shoot, 11% return is freaking good no matter where you slice and dice it. Better than most real estate these days. But but I'm looking at it more. Remember I I said it's the purpose. It's it's not it's not the tool itself. Like a screwdriver can poke holes. It can scrape paint. But it's the it's not the tool itself. It's the purpose of which I use it. Um, it's a very productive asset. Layer one or uh Okay. Yeah. So that's layer two.

All right. Now this is all asset liquidity. So then liquidity I go to I go to level three. Now my asset liquidity are things that I can put more money in but I don't need it as fast. But remember we talked about not all assets are collateral and different assets have different liquidity ratios. So for example, my whole life insurance policy, uh, my Bitcoin, public equities, you know, my stocks, my Tesla, Apple, Google, whatever. All of that is is pretty liquid. It's pretty fast. Like I could probably get money out of any one of those things. Whole life Bitcoin equities within a week, less than a week. Again, some of this is like, do I already have a margin account set up with my stock broker? Do I already have a loan account set up for Bitcoin? Do I already have my whole life set up to withdraw money? But if I have those ready, I can typically get money in less than seven days. Then we have like moderate liquidity. So then I have uh my home or or or rental properties. And for those I could get a HELOC. So, you know, I could access a couple hundred grand, 300,000, 400,000, whatever, in probably, you know, less than two weeks. Call it at 7% interest. If I had a business, I could probably get a business line of credit, get, you know, 100 grand in in in a week. Um, but those are if I already have those things set up. If I had uh or low liquidity might be like I have 500,000 in home equity, but I have to refinance the home. If I have to refinance the home, I have to go through all the paperwork, all of that. Um, that could take 45 days, that could take 60 days. Okay? So, we only want to use these these the liquidity on these assets in layer three for planned strategic moves. These are not for emergencies. Emergencies are layer two. One is for operating, two is emergencies, three is where our our money really grows. And we're only going to access it for planned strategic moves. Okay.

So, here's how we kind of think about this. How do how do you use layer 2 versus layer 3? I would use layer 2 again sort of in the emergency situation if I need quick money if I needed less than 100k because I wouldn't want to keep a lot of money in there, right? I only kind of keep what I think I need for that emergency fund, whatever that is for you. Maybe three months, maybe six months, maybe two years for some of you, but I don't want to put too much into there because layer 3 is still pretty readily available. I want money that I need uh, you know, less than 12 months is sort of my timeline that I'm thinking there. The interest cost is more than the yield on cash. So treasuries, money market accounts going to pay me four or five versus the cash paying me, you know, 0.5. I'd use layer three. I would borrow against those if I needed more money, if I needed more than 100. So, if I'm doing something strategic, I'm buying a new business, I'm buying a new piece of property, something like that. If I want to hold it for more than 12 months because the asset's compounding faster than the interest rate is. So, on layer two, you know, it's in a treasury money market account, stretch, whatever. I'm making five, four, five, six, 8, 10%. That's fine. But layer three, the asset should be compounding faster than the rate that the yield is being produced on layer 2. So, for example, let's say that I had, you know, $2 million of equity. I might want um, you know, depending on what my expenses are, my operating expenses are, something like that. But maybe um tier one might be 250,000, tier 2 might be 500,000, tier three might be you know 1.2 million. So sort of split up your wealth in those in those trenches. All right, real quick. Raise your hand if you have a layer two and it's earning more than 5%. Or or or drop it in the chat. Drop it in the chat there. I see I see the hands. There we go. All right. Well, all right. Doesn't it count if it's a different country? No. None. None of this is none of this is country dependent yet. We haven't gotten there. The only thing that's going to be a little bit country dependent when we get there tomorrow will be taxes, but it's all still basically the same. As a matter of fact, uh, quick little sidetrack. Um, I went to Asia for the first time this year. Well, actually, it was last year now. In August, I went and did uh two keynotes back toback at Bitcoin Asia. It was in Hong Kong. And then, um, I took my wife over there and we went over to uh Beijing and went and saw the Great Wall. It was pretty cool. Um, I never been to China, but I just have this this view of it as an American that like it's like Chinese communist, you know, country. Like you can't do anything in a communist country like China without the government and all this stuff. And um, you know, after being there and like talking to a bunch of people, you know, my my perspective wasn't really the reality that I saw when I got there. For example, I guess you can just start businesses. If you live in China, you can just start a business. You can own a business. And uh, what I'm what I was most surprised on is the taxes. You might say that if the government took 100% of your money, you're like a slave, right? They 100% you're a slave. What if they take 0%? Then you're free. So then what if they take 50%. What I was surprised with is that as I started talking to people there and then as I started to do my own research to figure this out, the tax um code in China is actually very similar to what it is in the United States. Meaning they have different um tax levels, percentages. So the more you make, the higher the progressive tax plan, the more you're taxed. Um, they have tons of tax breaks and tax incentives that you're allowed to have. As a matter of fact, a lot of them are even more attractive than we have in the US. For example, in China, they really incentivize people investing into tech because they really need tech over there. So, I was really surprised. I'm like, dang, the tax code, the levels, the percentages, the tax incentives are very similar, surprisingly. So, anyway, country, we have tax tomorrow, but still really okay. Anyway, back to this. So, we need to get layer 2 make 5%. That's the first thing we're going to fix today. By night, you're have a plan. We're going to get your emergency reserves earning 8% 12%.

All right, finally, let's get to layer four. This is illiquid assets. All right. These are assets that build wealth, but they're not quick. There's no quick liquidity. You can't get money, let's say, in less than 90 days on these. So, I've already used the example of course many times, you know, private equity, venture capital, most businesses, most private businesses, which is really private equity, most of that is not easily accessible. Uh, these assets are good. I'm not saying not to buy these. They're great assets to buy because they build long-term wealth. They compound. I mean, private equity, venture capital has great return profiles. You have to be willing to lock that money up for long periods of time, right? This long-term compounding. This is not emergency liquidity. Um, like I said, it might take you months if not years to get access to this capital. Um, now a lot of times this might be 70% of your net worth, up to 90% of your net worth, but we like this category because again, it makes really good returns. We might be 50% up to 30% compounding over long horizons, but it's useless to us in the event of a crisis. So for example, uh, real estate, residential real estate is not really the most they're not liquid M3, but like shopping center, commercial real estate certainly falls in there as I said private venture capital falls in there. A private business entity, if you have your own private business, it might be hard to um sell that if you need to. Retirement accounts a lot of you have retirement accounts, 401ks, IRA, Roth IRA, things like that. You can't really access that money without paying huge penalties. Um, you might have some of you guys mentioned earlier, you know, uh collectibles like someone talked about having Porsches, you know, rare rare Porsches. Somebody said like collectible cards, trading cards, Bitcoin, uh baseball cards, things like that. Art, land, someone asked about land in Florida earlier. So all of those are like number four illiquid assets. Um, I have this house down in Mexico down Cabo and when I was down there for New Year's, my neighbor said that um we're on the beach, but across the street there's a bunch of land for sale. I can't buy five bers. You should buy five acres, too. Man, how much this land is worth in the future? Maybe. So, if I were to buy that, that'd be another four asset. It has the potential to compound a lot over the next 5 10 20 years, but it's extremely illiquid. It's land in Mexico. So, it'd be a layer four asset. How do I know if I should buy that or not? Well, when I get my Treasury OS doctrine together, it will show me where my percentages are and if I need to move more into layer four or more into layer three.

So, I showed this slide at the end of the previous session, and so we have to understand that not all collateral is equal. So, I like to think of things as a spectrum, as as I think of most things in life. As I said, if I keep 100% of my money, I'm free. If I give up 100% money, I'm a slave. So, where am I in the middle? Um, I think about all uh, there is no such thing as passive income. All income requires some work. It's just a spectrum of how much work. Anyway, all collateral is not equal as well. So on on a liquidity spectrum. So residential real estate it takes you know 30 to 90 days to get an appraisal to get the underwriting done. Commercial real estate could take 60 days up to a year. You know, it's very complex. There's fewer buyers. I want to sell private equity as I always said three to 10 years. It's locked up. There's no there's no exits. There's no public markets. It's private. Um, business equity could take me you know six months to two years to try to sell a business. I have to do diligence on it. I have to do you know get price appraisals on it. I have to do negotiations with the buyer. My retirement accounts those are a little bit more liquid. It might take me a couple weeks, but again, I'm gonna have, you know, huge penalties uh for getting out early tax penalties, things like that. So, if I needed, say, you know, $120,000 to survive 12 months, only liquidity in layer four, um, commercial real estate, you know, I couldn't access it in time. It would take me 90 days. So, if if I ran a situation where all I have is that asset, I think someone asked layer property in Malaysia and it's undervalued right now. It's costing them money to keep, but if they need liquidity, they have to sell at a deep discount. So, I have to sell that at a 20% 30% discount. But if they had layer two, it would have solved that. So, layer four builds the wealth, but it's not going to save you in crisis.

So, what we want to do is think about it in ratios. Now, these are not hard and fast ratios. These are rules you're going to develop for yourself based off of where you're at, what your total liquidity, what your operating returns look like, all these things. So liquidity ratio might be like layer 1. I I would want add up how much do I have in layer 1? Add layer 1 plus layer two, layer two plus layer three, and then divide that by my total net worth times 100. Basic math. Basically, what percentage of your total net worth is in each layer. And we want to find out so we can know what percentage of my net worth can I access in less than 60 days without being forced to sell an asset. If you notice, the thing I keep going back to is don't be a force seller. So how much liquidity can access in the event of emergency without being a force seller and understand my liquidity ratio. It tells us how much of my wealth is functional versus frozen. So for example, if I had 5 million net worth but only 100,000 in access assessable liquidity, my ratio would be 2%. That mean 90% of my wealth is locked up. So if I needed an emergency, if I needed 200,000 in 30 days, I'd be forced to sell an asset and potentially maybe I'd be forced to sell at the worst time. Again, if dropped down to 70,000, I I didn't force to sell at 7,000. I would wait back to 125. Real estate's similar but different, right? So, I think a good goal here would be to have about a 10 to 25% liquidity ratio, which would mean for every 1 million in illiquid assets, layer 4, I would need 100 to 250 in layers 1 through 3.

Hey guys, uh, I know, as I warned before the session, I'm going probably deeper than I should with you guys. Uh, I I understand this is uh, this is really coaching content. Um, and so when I put this together, I kind of like I'm trying to find the right blend of like how deep can I go with in a short period of time. But as I told you, like this isn't one of those seminars you go to a hotel where they're trying to sell you a course full time. I mean, yes, I do have courses to sell if you if you want me to help you with this, but like I wasn't trying to hold back. So, I just want to get give it all to you. And I'm sorry it's super fast and I see people like, "Oh, repeat the numbers. Repeat the numbers." Take notes, man. You get your pen and paper. Uh, you can buy the recordings, you can buy the slides, uh, you can buy the tools if you didn't mind. I mean, 100 bucks. Like, I mean, come on. Rick. Um, but anyway, uh, sorry I can't keep repeating myself because we have a lot to cover today and tomorrow. I mean, I want to make sure you're totally equipped when you leave tomorrow. And so, anyway, we're keep going.

All right. So, what percentage of your wealth can you access in less than 60 days without selling? That's the question I want to know because can I cover margin? Can I cover expense? The bigger your layer four, the bigger your layer 1 through three must be, right? It's a percentage. Again, so numbers repeat again. 1 million in layer four probably needs 100 to 15 layers 1, 2, 3. That would be 5 million in layer four would then be like 5750 in layers 1 through three. 10 million in layer four would be a million to two million in layer three. The bigger your illiquid base four gets, the bigger your potential liabilities would be, right? Because now I have more property taxes. I have more maintenance. I have more debt service. I have more tenant turnovers. I have all types of things that pop up. I have lawsuits I got to defend. I got all kinds of things. And so the bigger my asset base gets, the bigger my potential liability get. So then I want to make sure that layers one through three are set up to protect that. And then we want to create a set of rules because we don't want to be forced in the situation, especially when we're emotional, like if some sort of emergency popped up. So we want to have rules. We want to create a hierarchy. So layer one only gets used for routine needs. Again, operating operating expenses. Layer two, this is my savings. This is this is this is for disruptions. If I were to lose my income, if my business were to suffer a big loss, if some big emergency came up, that's layer two for it's not routine. I don't usually use it, but it's there if I need it. Layer three is for large amounts. I don't need the money for more than 12 months. And when I do use that money, we're going to talk about this more tomorrow, but when I do use that money for strategic things, not reactive things. Layer four, I never touch layer four. I only use layer four if layers 1 through three get exhausted. Shoot. All hell broke loose. I lost my job. My business this. I got a lawsuit. I got divorced. Whatever. I went through layer one. I went through layer two. I went through layer three. Oh, I guess I got to tap into layer four. I got to sell this. I got to sell at a discount. If you do stay alive, so be it.

Okay. So, let's do some work. You guys listen. Get out the worksheet. Um, we can go ahead and drop in the worksheet for um for session three, the liquidity map, liquidity reserves, I think it's called. And we're going to do some work here. We're looking pretty good on time. All right, we're doing good here. Um, so what we want is we want to calculate. We're going to do rough math. Again, this is all about physics. It's about just momentum. Objects in motion tend to stay in motion. If uh the PDF just dropped, grab it now before it's gone. Or just get a pen paper. Just get out a pen and paper. Fine. Calculate your layers one and two. Now, you may not have time to go back and like open up all your accounts and brokerage accounts and bank statements. So, just take your best guess if you can. Remember, anything's better than this point. Just get the wheels going. Like I told writers, sometimes start writing gibberish and then all sudden the real words are coming out. Use real numbers if you can. If not, make a guess. Let's just spend a few minutes doing this. Stay focused. And remember, the data is just the data. It's not good or bad. The goal is to make the data better wherever you're starting from. What matters is is that you're mapping the structure. Now, build it better. The numbers the numbers I know a lot of us maybe not us but some people are like an ostrich with their hand they don't look they don't look at their network they don't look their bank statement they don't look like I just know I know I don't look hope that's not us calculate layers one and two using real numbers from your accounts Joe says I'm AI bot to do this for me. Uh, sure, we have lots of AI bots. As a matter of fact, I have an entire AI master class that'll set up with all the prompts and everything. Um, and I can show you how to get access to that tomorrow, but you're still going to have to get the data into it. So, you're still data into it. All right. Layers one and two, add those up.

All right. So, write in your monthly expenses. Sorry, I actually need a prompt earlier. So, what we're going to write down is this. Get a piece of paper just scribble. I thought maybe I had a sheet. What are your monthly expenses? Now, you really want to be exact and precise here, but to save us some time, try to get a general rule of thumb. You don't have to get $7,600.79. It could just be like 8 grand. But what is your monthly expenses? Your mortgage or your rent, your insurance, your utilities, your food, your gas, your car, whatever. 10 grand. What is your target? Do I want two months, three months, one month? A lot of depends. If you're a government, you know, if you work for the government, I pay you like clockwork. I mean, maybe a little less. If you're like a sales rep and your income gets lumpy, maybe more. Then, what is my current balance in checking? So, here's my expenses. Here's the reserve. What do I have? I my mother expends 10 grand. I have 30 I I I need three months. I want 30K, but I only have 10. So my gap is 20. So we want to write a rule. You want to write it. Now I told you I have a whole module on how we optimize our income. And I have like the software where it automates all our accounts. We set up like 10 different accounts for different purposes. And then the money automatically flows between all the accounts and it's all rules based. So I can set all these rules right here. If this is greater than this, take 1 percentage of this and move it to here. It's an amazing software. And it makes all of this liquidity earn high yield and it all works as a system. But you have to build a rule first. So I'm not going to teach you teaching the software yet today. Right now, we're going to build the rules. So, I will maintain what? How much in your checking account you maintain? How do you know how much it is? Well, what are my monthly expenses and how many months do I want to hold? That's layer one. Layer two, finish this quickly. Target. What do I want now? 6 months, 3 months, 12 months. What do I feel comfortable with? It's all personal. This is not a steadfast rule. It's personal for you. 10,000 a month time six months. I want 60 grand. Lette, you know, I've never bought any Bitcoin. How do I know what fast is? Lette, we're not talking about Bitcoin yet. We'll talk about that tomorrow. You're trying to solve problems we haven't got to yet right now. Trying to figure this out. Where will I hold it? In my bank. Will I apply for a high interest credit uh a bank account? Will I move it into my brokerage account? Will I put it into a money market account? Could I have my bank sweep it into a money market account and do it back for me? Do I want to do something like stretch? What is the yield that I'm currently making on this money? What's my balance and what's the gap? So, I want to have 60 grand, but I only have 30. So, my gap is 30 grand. So, now we want to create a rule. Remember, as I teach you how to build all these accounts automated, so everything flows without having to worry about We have to set rules so it knows how to automate it. The operating system can't run automated unless set rules. I will maintain what what is the minimum threshold that I'm going to hold in what? What will I hold in? Treasuries, money market accounts, checking before I deploy assets. I would not put Bitcoin in this category. Bitcoin is too volatile. I don't want to access Bitcoin in a third client like it is right now. It goes into layer three. Not layer two. Where goes in layer four even not layer two. This is cash or cash equivalents. Asset liquidity layer three. List three assets you could borrow against in less than seven days. Three assets that can bargain in less than seven days. Whole life. As long as I have set up, I call them no account. If I have Bitcoin and I already relationship, boom, I'm good. I have to transfer over. If I have a HELOC and I already got it open up or I have like a if I have credit open or business credit or credit cards already open up, boom. I didn't add them on here, but the credit cards I mentioned earlier, one of my friends, Jack, uh, he helps people set up, you know, six multi-six figure credit lines with like 0% APR for 12 months. Um, so I can have those. I don't have to use them. I can have it available to me. You can list those as well. Three assets you can borrow against in less than seven days.

Okay, now we can calculate it. Layer 1 plus layer 2 plus layer three equals what? Add them up. Layer 1 plus two plus three equals what? Estimate layer four at your best of your ability. It might be zero for you. It might be more. Fill it out. Add those all together. So now 1, 2, 3, 4 add it together using my total net worth and then find out my liquidity ratio. So all four times 100. I think if it's less than 10% that's danger. 10 to 15%. It's modern liquidity. I see Andrew, we're not worried about debt currently. We're not worried about debt. We're talking about how much liquidity do we have? That's what we're trying to do right now. We haven't got the debt. How much liquidity do we have? You Andrew, you ask are we worrying about debt? Yes. So, we started out with what is your monthly operating expenses? So, your debt should have been included into that. So, when you started with step one, I asked you what is your monthly operating expenses? Your debt should have been included in that number. So, so we are worried about debt. Yes. 10 to 15% moderate risk, 15 to 20% strong, more than 25%. Excellent. So, now ask yourself this question. What's one action? Write this down. With one action I can take this week to strengthen layers 1 through three.

All right, now we're going to do the fun stuff again. Let's try this again. Let's go to the breakout rooms. Barb, we ready to do the breakout rooms again? >> Yeah. >> All right, let's do this. Uh, we're going to ask three questions in the breakout room. Three questions. Again, this is just for sharing. You guys thought it was amazing the first time. We're going to keep doing it. One, what asset did you think was illiquid or I'm sorry, you thought was liquid, but it's actually in layer four. What two? What's your liquidity ratio? Were you surprised? You probably never thought in terms of this before. Everyone thinks Michael says liquidated. If Bitcoin drops to 30,000, all these stupid Wall Street analysts. If Bitcoin drops 30,000, Michael says liquidated. They have no understanding of what liquidity is or how this works. And so it's not of course not surprised you guys. What's the liquidity ratio prize? And then three, what's action taking to strengthen layers one through three? Those are the questions. Those are the problems. Again, no debating. No debating classifications. No. What about this? What about that? No. Just share and listen. Share and listen. Go ahead and throw everybody in the room, Barbara. And we're going to give it uh, we have eight minutes. Eight minutes. Think about every poor decision you've made in your life. There was more emotion that was involved in it than there was mind. Every single one of them, your feelings keep you in bed. Your mind tells you get up. >> Do you feel like getting up? No. Do you feel like making that cold call? No, you don't. Do you feel like doing that third set of reps? No, you don't. >> If you can't control your own brain and your brain controls you, you got to tell your brain where you want to go, how you want to go, how you want to get there. >> See, it's easy to be on the bottom. It doesn't take any effort to be a loser. Doesn't take any motivation to try in order to stay down there at a low level. But it calls on everything in you, ladies and gentlemen. You have to harness your will to say, "I'm going to challenge myself." Sometimes I have to pull myself out of bed to complex. Things I know I should do, I don't do. Things I shouldn't do, I do. I found that the biggest enemy you have to deal with is yourself. If you do what is easy, your life will be hard. But if you do what is hard, your life will be easy. >> Too much is given much required. Don't worry about it because if you do what's required, you will get the reward that goes with it. Tired don't mean nothing. Tired is only in the mind. Tell yourself something tired. Don't be tired. I don't get tired. Take control of yourself. Take control of your emotions and figure out how to move forward. I don't care how small it is. I don't care how mediocre the movement is, but make movement. Move forward and do that every single day. No matter what, >> you got to focus on the result. You got to focus on what it is you are gaining, not what you are giving up. >> You're talking about will now. You're not talking about how strong you are. You're not talking about how tall you are, how big you are. You're talking about real. It is a mentality. It has everything to do with what time you wake up. It has everything to do with how you eat. It has everything to do with how you work out, how you prepare. It

has every single thing to do with how you think and you want as bad as you want to breathe. Says, "I'm willing to make any sacrifice. I'm willing to go through any pain. I will go through any sucker. I'm willing to go through whatever it takes." So, I get in there and I guarantee you at the end of it, I'm going to be the one that surrendered.

Whenever I face anything that challenge, whenever anything sucks, I like it. It's going to make me tougher. It's going to give me a good story to tell. It's going to my mind. You know what military training is? You know how they bond to military groups? They make me do stuff that sucks. That's what they do. What's boot camp? It's a sucks fest. When something sucks, good. It's going to make me tougher and it's going to make us stronger. So, bring it. It's time.

With hard work and dedication, you can reach your goals. If you are willing to put in the time and energy, there's no reason why you cannot have it all. If you are ready to fight and do what it takes, there's no reason why you cannot reach your dreams. If you are not happy or fulfilled by what's around you, create your opportunities. Step out of the box. Find your passion. Put in the work. and you can have what you desire.

It's time.

We all know that life is hard. Life is tough. It's not meant for the weak of heart. Only the strongest will survive and make it make it to the end. Only the strongest will achieve their goals and find success. Even though life is hard, everyone has what it takes to make it. It's up to you to this person. Do not give up. And do not quit. People believe in you. People are counting on you. If you don't do it for them, do it for yourself. No matter what happens, do not give up. No matter what happens, do not quit.

It's time. I do as many push-ups as it takes. as many situps as it takes, as many reps as it takes. I study as long as it takes. I pay whatever the price is. Why? Because I started counting the cost. I might give up. I might quit. I might give up. I might surrender. Don't count the cost. You don't count the cost on this. You don't count how many reps you take. You don't count how many breaths you take. You don't count it. You get to a point where you don't count it. You just get to a point where you do whatever it takes to get what you want. You don't decide to turn your dreams into reality. If you don't decide to live your life, you don't decide to conquer your fears. If you don't decide to say yes to your life, life will never work. The time for wishing.

All right, everybody's back. All right, welcome back. Welcome back. Welcome back. All right, what is uh what is one asset that you thought was liquid? Like I said before, maybe think about this way, but now you realize it isn't. 401k, Bitcoin was used as my emergency fund. Oh, that's scary. Stocks, um, some breakouts are hit or miss. Really depends if they participate or not. Um, you know what? Uh, I apologize. I don't have control of that, but what I could really ask everybody is please participate. Go all go all in. Like, you're here. Like, play full out. Like, again, I kind of said my fear was giving this away too cheap because people don't value it. If you paid a lot more for it, you really get out. So, play full out. Um, 401k, 401k, um, IRA, Florida rental property, Roth IRA, layer one, layer one and twos need work. Okay, I'm I'm a Bitcoin maxi. Me, too. Me, too. But we sell other things in Bitcoin. The meme is sell your chairs. I I I still have chairs. I've been to Michael Taylor's house, I think three or four times. Uh he's got multiple houses. I've been multiple houses. And he's got three yachts, not one. Three yachts out front. So, even Bitcoin maxis owner than just Bitcoin.

Complete the sentence. The difference between layers one and three. One to three and four. The difference between one to three versus four is what? What's the difference? Liquidity. Liquidity. Yep. Time preference. Access. Yep. Compounding. Yep. Layer four. Now, let let me tell you why this matters more than what you're thinking right now. It's because you haven't been shown the whole game yet. Right now, we're building the motor. Tomorrow, when we talk about bolting on the horsepower and we talk about putting the supercharger on and we talk about putting the nitrous oxide into the motor to get us from 100 horsepower to a thousand horsepower, this stuff will matter. When we start trying to move dormant capital to build our wealth like Michael Sailor 300, 500 faster, this matters for some buy whatever, sure, whatever. Sure. But if you're like us who are like, "No, no, no, not whatever. I want to build more wealth than I need. So, I don't have about rent before I die and my kids don't want to start from zero." Then it's not whatever. Understanding the these different layers are going to be very important when we start putting on the nitrous oxide. You need to know the limitation of your motor before you can strap it on.

Um, I told you I was a Raptor Raptor owner. They have a new one called a Raptor R. And my truck has a V6, the new one has a V8 and instead of 500 horsepower where there's these guys these guys on Instagram and they just put a twin turbo supercharger on the motor. So now it pushes not 750 horsepower like stock. It now pushes 1600 horsepower to the rear wheel. Like double double the amount of horsepower motor. But you know what they do before they put that on? They had to change a lot of the parts in the motor out because the stock motor couldn't handle that much horsepower. So before we go tomorrow and start giving you the superchargers and the nitrous oxide we got to make sure we have this built properly and if it's whatever for you then it's whatever then maybe you need to stay around past today.

Um, okay homework we jump to the next module. So again we can finish all this today assignment complete layer 4 detailed table list every illquid asset more than $50,000. Refine your liquidity ratios with exact numbers which you use now which is guesses not estimates right one specific action timeline not increase layer two but do this do that apply for a credit card you know get marked contact you get $100 business crime apply for business line credit get a helock whatever and then submit it by the day if you want coaches review it and be with it.

Okay, here's what you now know. Here's what you now know that 99% of people don't. The 1% know it. Net worth is the vanity metric. Liquidity is the survival. Don't die. You can have 10 million on paper and just be one income disruption away from force selling it all. I was there. I'll tell you my story tomorrow. Or you can have three million and be completely resilient. What's better? 10 million but on the verge of dying every time I turn around or three million and be sleeping. I never have worry about money again. Obviously, we want the peace of mind. We want the freedom. It's not the number. The difference is layers one through three. Layer four builds the wealth. Layers one through three protect the wealth. By now you're going to have the exact equity ratio and a plan to get you into the safe zone wherever you think that is. And next we're going to go and do the one that you've been asking for the most, which is the risk and leverage policy. We're going to stress test everything you built. Somebody asked earlier, I put it on the Bitcoin. I thought, "Okay, when turn down 30% and I find out that I'm over leveraged, I'm stuck." So we don't want we want to find out how we get stuck. We want to stress test it before we get there. That's what we're going to do.

Um, we're going to stress test everything that you just built and let's see where we're at. So that's it. We have one more session and then we're done today. Wow, it flew by for me. I don't know how it's been for you. Uh, but by the all four artifacts done. We've got three so far. You have your personal treasury binder. You're going to have well all four in the treasury binder. It's the lobe bearing structure of your financial life. This is this is the foundation. And when you're done, you won't have a plan, but you have an entire operating system. So, uh, give me, uh, what do we got? Three minutes to switch over to my production. We're going to go right to the last session except for VIP. I see SM mind blown. Yeah, but we ain't seen nothing yet. It's gonna keep building. So, give me, uh, give me, uh, what do we got? Two minutes. Three minutes. Give me three minutes. I got to get my slide deck open. I'm going to run the bathroom real quick. We're going to finish it strong. You ready? Let's go.

To remind others, of your greatness, of your losses, of your victories. Make this feeling good. You guys have been sitting in that chair a long time. I've barely sat down at all. I've been standing up most time. How about we just stand up real quick? Just stand up. Come on. Just There we go. Yeah. Stand up. Let's just go one more session. Let's finish it strong. Get that blood pumping a little bit. Okay, there we go. Let's all participate. All right, everyone's participating. I love it. I love it. All right, you're almost done with day one. Almost done. So far, you've built three pieces. The rules your rules. That was the treasury doctrine. We built the assets, which is our balance sheet x-ray. We went through the liquidity stack, which is getting all of our assets lined up in in order liquidity, coming up with ratios and percentages. There's one piece that we've left. It's certainly not the most important, but it might be. They're all important, but it's the last piece. It's the guardrails. It's the guardrails. This is the session that prevents the system from collapsing under its own pressure. Okay? Like I told you, a hedge fund is a fund that's trying to make a bunch of money, but they protect and hedge every position. Think of like a pro sports team. Think of like like maybe like soccer, for example, football. Um, or basketball. They have their full team on the court. Like football, they swap out offense and defense. But like say like soccer or basketball or full team on, right? And even if if the soccer team is trying to score goal, the offense has the ball up up in their opponent's goal area, but they still keep their goalie back and they still keep the defensive playback just in the case, right? So we want we want to plan for offense. I would rather be an optimist and be wrong than be a pessimist and be right. So I believe that we have to shoot the shot. We have to take the risk. We're optimistic, but we don't want to die. So we want to protect ourselves. That's what today is all about.

All right. So we're going to walk through a treasury stress test because the treasury is only as strong as the weakest point of failure. Okay. Now we've gone through enough where you know what you own. you know how to access liquidity, but do you know what would force your liquidity? I talked about how losses are asymmetric. What that means, Patrick Lewis, debt is bad. Okay. Well, you're definitely in the wrong place, Patrick. Uh, what I'd say is that um losses are asymmetric, meaning if I lose 50% on an investment, I now have to make back 100% just to get back to even. It's pretty hard to make 100%. That's why Warren Buff says don't lose. Now, losses are inevitable, but we want to do our best to not die. Think about it. Not that I'm miss. I do a lot of action sports but I haven't like climbed mountains but you know mountain climbers and man there's these new breed of mountain climbers who do without ropes like they're crazy. You guys seen those guys they climb these mountains without ropes but the smarter ones that use ropes and they you know put the legs in they climb up and if they fall they might fall like eight feet and they probably get little bumped up and scratched up or bruised or whatever but they don't die. They don't die. That's what we want to do. Okay. We don't die.

Um, okay. So what we want is we want to have a policy that limits our risk because risk isn't the volatility. The risk is the liquidation that could come from the volatility. For example um well I could keep going examples. probably to keep going, but it's the it's the ability to summit the volatility. Volatility measures how much an asset moves up or down. Bitcoin is a 50 ball asset. What that means is it compounds at about 50% per year, but that's averaged out, but it also means it can go up 50%, but it can also go down 50%. Bitcoin treasury companies like Micro Strategy are two times the volatility of Bitcoin. So, if Bitcoin goes up 50%, they should go up 100%. If Bitcoin goes up 30%, but also when Bitcoin dropped 30%, Micro Strategy dropped 60%. So, we need a system that allows us to ride the volatility because big turns. We don't get wiped out on the downturns. So when we start to layer strategies, how do we protect ourselves from that? Well, we need a policy. So we want to protect ourselves from overleveraged Bitcoin, overleveraged real estate or lender concentration. Those are the three we threw out earlier. So for example, let's run through a couple examples. Example one, overleveraged Bitcoin. Somebody talked about this earlier. They borrow stock. So we need rules, treasury rules. Like if I had let's say if I didn't have any rules, so I put no loan to value cap. So let's say that I borrowed 60% loan to value against my Bitcoin. Bitcoin drops 50%. That means my loan to value just dropped to 120%. What would happen? My lender would margin call me. What happens if I don't have liquidity to cover? I get liquidated, I loit, I die. I die, I lose it. But if I put a loan value cap in place, for example, I say I won't borrow more than 40%. Now, Bitcoin drops the same 50%, but now my loan value only drops 80%. No margin call. I know it sounds like basic entry math, but most people haven't thought about this. And again, it's about putting rules in place.

Example number two, I do with real estate. So, say I don't stress test this at all. And so, let's say that I have a $1 million rental property. It's got a $900,000 mortgage, 90% LTV. And let's say that, you know, returns aren't always good. Let's say that my tenants don't pay. Let's say that I own it in a blue state like California, and I can't evict them. And I, let's say I can't get them out for six months. If you guys aren't from California, Colorado, you don't know what that I'm talking about. But in the state of California, I can't get people out of my property even if they don't pay me. So now they're there for six months. Let's say that their payment was $5,000 a month. That's $30,000 that they didn't pay that I have to continue to cover the payments. I got to pay mortgage. I got to pay the dealers. I got to pay the interest. I got to pay all that. Now, if I if I bought that on, let's say I borrow against one asset to buy the rental property and a high LTV on that and then they don't make the payment. How do I cover that? I got to come on pocket 34 grand. I don't have any liquidity. So what what happens? I'm forced to sell the property. Maybe at a distressed price, maybe it's worth 900,000 and I got to sell 850. Now, I've taken a loss, an asymmetric loss. But if I stress tested it, I'd say, "Well, shoot. I know that even in the state of California, even in a blue state, at worst, it's probably take me six months to get them out. So, how about if I keep a six-month reserve of 30 grand? That way, if a tenant defaults and I got to go all the way to the court system, I can deploy my reserves from layer one or layer two and I'm safe."

Another example, lender concentration. Someone asked earlier, what if I used the lender for my Bitcoin business like concentration? No guardrail. So, for example, I have $5 million in assets. All debt, let's say I have $2 million of debt against the 5 million and all that debt, all two millions with one lender and then the market crashes. Market crashes 30%. The lender that I'm with panics. So they margin call me. They margin call all my positions simultaneously and I'm forced to liquidate a million dollar position at 30% loss. This happens in 2008. I work with with a hard money lender. Hard money is someone that just gives me a loan against the asset, not credit banks. And I worked with them for years and I could just call them up. I got a $2 million, a couple million dollars wired by morning. Like I did cash deals, but they were an arm of the bank. And the bank actually is a bank that went down in 200 cash and took down the lending business and I got hard call across everything. It happens. But if I use the guardrail, I wouldn't concentrate. I'd have, let's say, I set a rule. I don't know what I need, but maybe no more than 40% of my debt would be with one single lender. So with $2 million, I'd split between three three different lenders. That way, if market crashed 30%, only one lender margin calls me 650,000. I don't lose all 22 million. And I have that 600,000 in my layers 1 2 three. I can get into listen very closely. We're going to get into this, but just listen. It's very dangerous to go surf 30 waves in pipeline. But if I get good at holding my breath and I learn how to swim and I learn to stay calm under pressure and I I practice for a decade and I have jet skis in the water with me and I wear safety vests and I can make it safer. Now even with all that I'm probably not going to do that. But my point is like we can de-risk things and that's how we do it. Now if I hedge my positions like like a hedge fund, does that limit my growth? Sure. You get a little bit of the upside protect downside. But it's worth it. Every smart investor thinks about protecting the downside. Gabriel, can lenders margin call on a home mortgage? They can for a lot of different reasons. Do they? Not usually. Could they? Sure. A lot of reasons. What guardrails did Michael Sailor use against JP Morgan attack please? He didn't need to use any guardrails. His guardrails are not what how he protects himself from JP Morgan. His guardrails are how he protect himself from getting liquidated. So for example, all of the debt that he owes is non-recourse debt and is not collateralized against the Bitcoin. So even if even if the price of Bitcoin dropped to 15,000 and then even if he couldn't deploy any of his six or different tools to raise liquidity and he goes through all eight and can't get money even if he ends up defaulting, they still can't force him to sell Bitcoin. So he set up his structure through all the agreements, all the backup plans, everything to make it he where he cannot get liquidated. That's the garbage. It wasn't JP Morgan specifically leg anybody try. We have a wall. Go ahead, throw your rocks. I got walls. I got eight layers of walls. Good luck. So, it's not it's not how I prep. It's how do I set up a wall a system of defense that I'm impenetrable.

Okay, why do loan value caps matter? Because it prevents over leverage. Obviously, it creates a buffer for the draw downs. It determines where my liquidation risk will be because I need to plan ahead. How much liquidity do I need? I don't know that unless I can plan ahead. So, different assets have different volatility ratios. Meaning the chance meaning the percentage they move up and down. Again, cash is I just recently did a volatility master class on YouTube. Go watch it because I break down my asset. But, cash is 01 doesn't go down. Bond go 1 to 4%. S&P 500 12 to 15% NASDAQ 17 20% Bitcoin 50% Bitcoin company 820%. So I need to know what the volatility the potential up and down is so I know what LTV to use. Let me give you a couple examples with Bitcoin. Let's let's say scenario A 30% LTV. So I borrowed against a million dollar I borrow 300 grand. So 30% LTV I Bitcoin goes down by 50% means my million coin up to 5,000 L to be 60%. No big deal. It's below my 80% article. Result, no big deal. Scenario B, I borrow 60% LTV on the 1 million. It dropped to uh I borrow 600,000. it dropped uh 50% down which push my to be 100 point event I get margin call now I get liquidated if I don't have liquidity I've talked about this already so the 30% LTV keeps you safe even if crash 60% LTV I can be liquidated so what do I do about that well first I have to understand the risks so a couple things number one I can cap my LTV instead of doing 60% about 30% number one number two I have to understand where I'm at in the cycle which I see number three do I have liquidity to cover margin call for it there's different layers like Michael there's multiple layers of defense that we can employ so we want to think about what are our caps per asset class and I sort of put some of them on there let's see if I can I can't really see what you guys are seeing see so like whole life insurance my money in there guaranteed. They're guaranteed typically like 5% per turn. So I got to borrow like 90% LTV and I really worry about it because that's like almost no volatility. Homes, I mean typically you're doing 80 90% LTV on homes. That's usually pretty safe. Rental properties probably a little bit less because of commercial loans. My deposits are bigger. Commercial real estate is even more liquid a little bit less. Bitcoin crypto might be 30 could be 50 depending on where market is. Public equity is even less because again they're way more illquid.

All right, so that's kind of about the reasons as to why on there. So let's do some tests. Test number one, asset draw down test. Get out your pen and paper here. Take your biggest position. Remember I think it was in session one or two you wrote down all your assets. So go back to your notes. Just grab the biggest one. That could be real estate. It could be a stock. could be Bitcoin, could be whatever. Calculate a current an LTV. So, let's say 50% LTV and the asset drop by 50%, what what would be my new LTV? Now, because I'm not really good at doing math on the fly. If an asset drops by 50%, it doubles my LTV. That's why 50%. You can adjust it, but if I have a 30% LTV, if it puts my LTV up to 60%. If I'm 80% LV, drop by 160 LTV. I see Kathy is asking about sending all the forms together in one summary. No, we're not doing that, Kathy. I'm sorry to everybody, but we're not doing it. You must be here live to get the training, including the resources. If you can't be here live, then you're not going to get as much out of this. But what you can do is you can buy the recordings, which get the slides and get all the resources if you want. They're all included for your basic price, which you have to be here at the time, so we're not sending them later. They go out live when we're doing them. Don't get extra hundred bucks though. Come on. If you have found $100 value in here, then you might leave right now.

Okay, so we do that. What is our new LTV? If your new LTV is more than 80%, you're probably in liquidation risk. Okay, now that's a draw down. Let's do stress test number two. What about if I had income disruption? A lot of you were worried about that when we went through that exercise earlier. A lot of you were worried about income disruption. So, let's calculate your monthly expenses. Now, you don't have to. You already done it. So, just go back a couple pages in your notes. What was your monthly expenses? 10K, 20K, whatever. Check your layer 2 reserves. Not layer one because layer one was your operating expenses. Layer two, which was your emergency reserves. Check that. That' be your money market account, your treasuries, your bills, your stretch, whatever. Divide layer two by your monthly expenses. If it's less than six months, you might be in the danger zone. These are not hard and fast rules. I'm trying to help you think. These are individual. These are personal. They depend. They depend on factors. What's the asset? What's the volatility? Where are we in cycle? What's my income like? What's my risk level like? They depend. Where are you comfortable with? I surf big waves. I go brakes. I've got eight major surgeries. I met all my limbs. So, don't take your risk advice for me. Some of you might be much less averse to risk. Go with what makes you sleep good at night. Okay. Can you say that again? Please mark what we divide. I say it again. So, we're doing an incomeru test. Your monthly expenses, which you should have written down before divided by your layer two reserves. Layer one is we're operating so we don't contact. It's our emergency. We're stress testing right now. Stress testing monthly expenses divided by layer two reserves. How many months? It's less than six. You might be in the red zone. Okay.

So, I've already said this example a couple times. If you did this with me, you had a million dollar bitcoin grand LTV. Bitcoin drop 50%. What's the new LTV? Drop it in chat. Most of you got it right. 60. I see some 80s in there. 60. 60 is right. Okay. Now we got a lot of got that right. The margin called at 80. So are we good? We're good. Right. If I didn't have very much in layer two, I want to be way more conservative with my LTV. If I had a lot of money in layer two, I could be more liberal with my LTV. It's my safety my blowoff valve. If I have a million rental property, I brought 700,000 7% LTV. The property drops 20% in a recession. Market downturn, whatever. What's my new LTV? This one's more tricky. 87. All right, we got some smart people. All right, 87 and a half. You're underwater, but you're not wiped out because you have long duration debt. We haven't gotten to this one yet. We're locked in for maybe 5 years on first property up to 30 years on residential. So, we're underwater, but we're not margin call because it's long-term debt. So, we have to go about the time to raise the debt. Your equity is wiped. If the bank were to revalue the property, right, they call the loan. That's probably not going to happen. That's why I like the capital like 7% loan value max. And why I like to keep up to 12 months reserves in layer 2. So, stress test this again. Take your biggest position. You already down. Run the 50% stress test. What's the new LTV? your biggest position real estate stocks bitcoin stress test test which you know to be right now uh jcrip says uh bitcoin because layer four isn't borrowable right so if you haven't bred against it then you have lb against it so you wouldn't use that rock sheets an emergency you're borrowing against layer two no layer two cash equivalence so you're not going to borrow against cash so you're going to deploy it I suppose you could borrow against stretch it's a little bit more advanced than what we're trying to do for this purpose technically stretch is not a cash equivalent it's equity so technically yes you could borrow against it if you needed to um that's a little bit more advanced than where we're at right now again I could use driver for a whole bunch of functions but primarily takes region out.

Okay, if your new LT is over 80%, you might be in the red zone. We're going to fix that worksheet. Okay, let's try another one. Your income stops today. Tenants stop paying, the client fires you, whatever happens, you get sick, your business slows down, doesn't matter. How long can you survive without selling assets? Who has 12 months in layer 2? If you not selling, who go six months or less? That's the gap. If you have zero to three months, you'd be forced to sell in 90 days. You have six to four months, you can survive most disruptions, right? That's what layer 2 is for. This is the liquidity test. Doesn't matter how much Bitcoin you have. If you can't pay rent for six months, Bitcoin's great. Bitcoin fixes the world. Bitcoin is the best we've ever seen in history. I think Bitcoin is the chance we have changed entire humanity. I think people make the world better. But if you can't afford your rent, it ain't going to help you. Layer two is your survival buffer. If it's below six months, we fix it in the worksheet. Liquidity is not super sexy. It's guess 5%. Maybe get 10%. But it's the difference between surviving and forced liquidation.

All right. All right, now let's look let's talk about some objections here. Making the payments. But if I use debt, if I leverage these assets, if I go to 60% LTV or whatever, I've heard it all. Trust me, I've made a bunch of videos on this. I've asked thousands and thousands of comments about this. What What about the payments? Well, if I break that question down, there's typically sort of a couple different underlying thoughts there. One, the fear. If I borrowed 300,000 at 10%, now I owe $30,000 a year. Where does that come from? Anybody thinking that? No. No. No. Okay. That's weird. That's number one thing I've heard. Okay. Yes. There we go. Where does it come from? Well, it's not the payments that are the problem. It's a design variable. The payments are something we just designed for. Where do they come from? I don't know. They come from anywhere. We design where they come from. For example, I could borrow more than I need and I can create an interest account. For example, I need 300,000 liquidity. So, I borrow 400,000. Let's say I pay 10% on that. I I use the 300 for what I need and I put the 100,000 in the stretch to make 11%. Now, it's I owe 40,000, but I'm earning interest. I earned let's say uh you know, I earned 10,000. So, my net cost is like 30 grand. But in the bank, I have that extra reserve. So, I have like three years of runway. I just designed around it. The reality is I'm not hoping to make payments. The reality is I'm funding them in advance. I'm preparing for them. I'm designing for that payment. It's not like, oh, what happens? No, I I've planned for it and I've already built it out. What else? Well, what if my reserves run out? That's the next question. What if what if the reserves run out? The fear. What if three years passes and then I'm out of reserves because I told you design three years? Well, one design for longer, you design four years. Uh, well, there's a couple. Number one, if I let's say I borrowed 400,000, as I said, I get a million Bitcoin. Three years later, my reserves depleted now. I can't refinance. Let's say that Bitcoin didn't go up in three years, which has never happened, but let's say it did. So, now here three years later, my reserves depleted and Bitcoin didn't go up at all. What do I do? I could sell 400,000 40% of my stack to pay off the debt and keep the 600,000. That's one option. Two, I could take a new loan to pay off the old loan. That's called the debt. That's what the government does. I could replenish the reserves with a new loan. I could use layer two to cover the payments. I could or I could sell a small portion to cover it. And again, if I had to sell a small portion, which is the last resort. I don't want to do that. I'm just saying I got like four or five options here. One, just roll the debt, whatever. Two, replace some three. Use layer two. Oh, finally, worst case. Okay, I'm all the way to fourth the fourth one. Sell a small portion. Now, if I sold it again, I have to sell 400,000 of the million to pay it. And I have 600 grand. But what how bad is that really? Because if I had never done this in the first place, I would have sold the 400 from day one. I'm in the same place. I still end up with 600,000. But this way I had three years of liquidity. That's the worst case. So what we're doing is we're not adding risk. What we're doing is we're deferring our decision to sell. It's all about time preference, right? It's all about time preference, delaying consumption, delaying our decision if we want to sell the asset or keep the asset. We're buying ourselves optionality.

Okay, let's go to one more. Sounds like way too much risk for me. The fear borrowing against Bitcoin feels risky. What if it crashes? Okay, let's let's run through that. Scenario A. I'm safe. I have no debt. So, I have a million dollar in Bitcoin. I need $100,000 to live. So, I sell 100,000 or 10%. Um, I actually have to sell more because taxes, but I'm not going to get into the details of that. So, I I own a million dollar. I sell 100 to live. So, I sell 100,000 10%. What I did is I just locked in I just guaranteed a 10% position loss. If Bitcoin goes to 2 million, I lost $200,000 of upside. So, I lost 200 grand on that. Scenario B, the risky the risky side. I own a million Bitcoin. I borrow 100,000 10%. Now, Bitcoin drops 50%. It's only worth 500,000. Well, my loan to value is only 20%. Whatever. Safe. I keep 100% of my Bitcoin. Bitcoin recovers the 2 million and I capture the full recovery. So selling is a permanent risk. I can't undo that. I can't go back on that. I can't get that back. Borrowing is temporary exposure that I can adjust. I can refinance. I can roll. I can pay. I have options. So which one's actually more risky?

Now the downside guard rabbils again we want to you remember you guys remember uh the uh the Wall Street bets thing when uh all the Reddit guys were going to take down Wall Street over GameStop? You guys remember that? And uh it was a couple years ago and all the message boards were lighting up and like literally like these millennials were lighting their money on fire trying to take down the hedge funds and they're like we're all in because like these hedge funds they crashed our parents in 2008 and this is just about money like we're going to take them down blah blah blah and like they're going to crush the hedge funds, right? No, they were never going to crash hedge funds. That was never a risk. You know why? Because hedge funds never make a position without a defined downside. Every time they go into a position they define what the downside is. You're not going to blow them up. That's what we want. We want a downside. We want to have a guard on the downside. Preddecided actions that trigger before we're in crisis. Why? Because we're humans. We're emotional. In times of emotion, we act by emotion. That's why like uh in the military they train to train so they can just go on autopilot. Don't get frozen by fear by emotion. The the pre- actions inforce discipline. So guard number one, how about we freeze borrowing at a 30% draw down. If any lever asset drops 30%, I'll freeze any borrowing until recovery where LTB is reduced. Or guard number two, deploy reserves at a 40% draw down. So like if any leverage asset drops by 40% or more, I'll deploy layer 2 liquidity to reduce the LTB. Guard number three, we talked about this one, lender diversification. I'll never concentrate more than 20% 30% 40% of my debt with a single lender. The guardrails remove the emotion. Discipline survives the pressure. Again, we have to understand what do I think the risks are? How do we get the risks? I think something's going to break my front door. So I barricade my front door. I think I made ground. I put on a life jacket. I think I got my get liquidated. I change my LV. Make sure I punch plenty of reserves. It's not that risky when you understand the risk. The risks.

All right. So define one thing that would force you to liquidate even if everything else is working. Write this down. One thing that would force you to liquidate even if everything else is working. I have their own screen, right? Lender concentration, no liquidity reserves, floating reserves or floating rate, tenant concentration, etc. Now identify the single point of failure from that and write the fix because your system is only as strong as your weakest link. Your single point of fire example lender concentration 30 seconds the fix number four $5 million borrow from one lender all from one lender lender change terms on me they call the loan due what happens unfortunate assets so if I don't want that to happen then just don't concentrate more than 40% with one lender 2 million b lenders or email loan if I get to another lender we can only make risk that we can understand the error all right so now now we're going to get the worksheet time make sure you have your worksheet downloaded let's go and drop it one more time in the chat here for everybody in case you missed it go back again go and drop that one more time we're going to fill this out together then we'll go into breakout rooms and the debrief and we'll be done. So we want to build our risk policy and we want to do it together live. So one list every asset you borrow against or plan to and tomorrow we're going to get into how to do this and where they should go and how we stack it. Right now it's building policy. What are the assets I have that I have borrowed against or would be able to borrow against or plan to borrow against in the future. Just list them or on your list of assets just circle them or check check mark them for faster. Calculate your current LTV if you have one or uh set your max LTV if you plan to. It's the same PDF we sent out before. Um, Barbara official back there. You could drop that one. The liquidity one. I'm sorry. The risk the risk and uh risk and leverage one.

We're dropping it here in chat. Just one second. Hand. You don't see it. It's in Google Drive. Say leverage policy. Oh, uh, we're going to send you a full one for now. Just write with a piece of paper and pen. Oh, wait a minute. Let's go. Did you lose the slides there? Hang on. I put it back up. There we go. We're back. Okay. Uh, next we want to stress test our position. So my biggest position is what? Asset name, current value, and my LTV. We're stress test against the two scenarios that we've talked about. Number one, what if the asset drops 50%. What's my new value, my new LTV, my margin call threshold? And then against income drop. If you don't have any assets with any positions against them, take an asset that is could be used as collateral that you could borrow against and then write down what you think would be appropriate or LTV um ratios. The hat man. Okay, then what are the guardrails? Write three guardrail rules. Again, this is about getting something in motion. They don't have to be exactly perfect. We're just trying to get something in motion. So, here's some examples of what those potential guard rails could be. Because someone asked earlier in the chat, like how did how did Michael defend the hack from JP Morgan? He didn't he didn't defend the fact from JP Morgan. He uses a set of rules to make sure that he stays at risk. So, for example, if you pay attention, you realize that he's done two cash raises recently, but he's got two billion in cash now. So, what what does that mean? He built up his layer two. Why did he build up his layer two? Because he's afraid. He's not afraid, but he's he's protecting himself against his asset base dropping too much. The liquidity his equity dropping when he can't sell on the market, and he may need to cash. He's built up his liquidity layer. Layer two. Cash $2 billion. Those are guardrails. So if we want to if we want to, you know, be in the circus and go the tight rope on trappies. We want a safety net underneath us. Like go for it. Go trappies. Have fun, but have a safety net. Well, I don't need those surf ways, but at least put a life jacket. Make sure there's make sure there's a jet ski in the water for you, right? Ride your motorcycle, but put a helmet on at least. Come on, Mike Moriety. Unfortunately, he had to play the game. What does that mean, Mike? Unfortunately, he had to play the game. I'm not exactly what you mean by that. Here's what it means to me though, Mike. Unfortunately, every single one of us have to play the game. Why? Because the way that they are printing money and will print money. All right. what I broke down in the beginning today. Your cost of living is rising at a much more rapid rate than your income. So if you are not playing this game, you will be left behind and your quality of life will continue to decline and you will hopefully die before you hit zero. We are all forced to play the game. I wish it wasn't so. I hope there's a world in the future where that's not the case, but we are all forced to play the game. Okay, guard one uh freeze at 36 to 40. All right. And then uh number four, this is the final one. My single point failure. What would break your system? Write that down.

The fillable um the pop in the chat by the way. Scroll up and get if you want. What would break the system? I must know that so I know how to fix it. Examples. Write one down and then fix. How do I eliminate the risk? All day with one lender versus one tenant build reserves floating rate debt convert to fix rate. All right, it's our last breakout room of the day. Let's do this one. Good. Let's Let's do this one good. Ready? Last breakout room of the day. Three questions. What is your biggest single point of failure? Number two, what stress test surprised you the most? Problem number three, what's one guardrail you're implementing this week? Again, in these uh breakout rooms, read from the prompts and just answer them. This is about everyone getting insight from each other hearing things that they hadn't previously thought of. This is not about debating. This is not about you've got this right or I've got it wrong. Not the classification wrong. It's not about what if, what if, what if. Just what's your biggest point of failure? Let's stress and everyone go around real quickly and just say that. That's all we're looking for. Let's give it uh can we go 8 minutes? Let's get to eight minutes and we'll be back and we're going to finish it strong. Do not miss the rest of this today. Let's go.

And embrace the greatness that God has planted inside of me. Winter time. There's all kinds of winters. The winter when you can't figure it out the winter when it all goes wrong. The down time, the discouraging time when your heart is smashed in a thousand pieces. The nights are unusually long. Now, the question is, what do you do about the winters? Here's what you can do. Get stronger. If you want to do the push-ups, you can get stronger. You want to put yourself in the pace, you get stronger, start practicing, practicing, practicing. You need to get stronger in handling life situations. Of course, but you got to go to work on yourself. You can't blame out there. Wishing it was easier. Wish you were stronger. Don't wish away the winters. It's called naive. Get stronger.

Responsibility for reaching your dream lies with the one individual who has dreamed that dream. But if you don't give it, it won't be given. The determining factor is you. And you're going to make it happen. You are the difference. Nobody can do your work for you. Nobody's going to live your dream for you. You got to take.

Ownership of making this happen. You are the one. It's you. If it's going to be, you are the power in your life. You are the force behind your achievement. Circumstances, lack of support, obstacles, none of those things can stop you. If it's going to happen, it's you.

Your problem is not this opportunity. Your problem is fail like we're tired of you. We're tired of trying you to complain you. We're tired of the version. Racist is in you. You are here. You're here. Leave your mark. You're here. Do something. You got to get the speech mode.

You got >> "Were the small group better this time? Everyone participating? I gave a little pep talk last time. Like we got to play full out here. We're going to do it like we're going to do like it, right? Boom." That was great. Okay. I love it. I love it. I love it.

So, question number one. What is the difference between leverage and overlever? The difference of leverage versus overlever risk, stress, position size, pain, bankruptcy. Leverage is paid by tenants. Wisdom, risky, danger. Some of you got it right. 10 to 20%. More risk, stupidity. The difference is discipline versus hope. The difference is engineered versus gambling. Here's the difference. You just did the work. It's stress tested versus guessing. You just did the work. You stress tested. You do that. The difference is, am I just guessing and hoping in the brain or did I stress test this based off of discipline and rules? Plan, no plan. There we go, Quinn. Plan. That's a good, that's a good short way to say it. Plan, no plan.

Okay. Number two. What's one thing you're doing right now that you realize is fragile? What's one thing you're doing right now that you fragile? All in Bitcoin. Yeah. I mean, if you can't pay your rent, Bitcoin doesn't do much good. All in Bitcoin, not have enough reserves. Not having enough layer two, only rely on options. Layer one, two, not have enough reserves. So, too many people without a safety net. Too many people without a safety net. I'll tell my story tomorrow in 2008 for the unheard, but it cost me everything. You need to have a safety net. You don't want to die. You can fall off the highway. Have a safety net. Fall off the mountainside. I have the rope in there. All in on my W2 income. W2 income or work income or business income. Doesn't matter. But all in on that income source is the problem. Doesn't matter the source of that income. Again, it's W2 or not. Could be 1099. Doesn't matter. Okay. I need Bitcoin over 200,000. Need tips on making middle layers bigger.

Okay. So, that awareness is the fix because you can't fix, you can't protect what you don't see. The very fact that you guys are able to see it is the fix for today. The homework. So, we just barely started this. Obviously, get it in motion. Complete full risk leverage policy. For each overlever position, write a potential fix. If you want to submit by the end of the day for accountability, we can help you with that.

Looking back real quickly, let's think about this. Man, we've come so far. How many people this morning woke up thinking that they needed to make more money and now they realize that the key is getting my money to make more money for me. And they actually see a path to doing that. That's a huge mental shift, right? I mean, come on. Like, we've all heard "my money should make money" and "we're both make money when I sleep" and we've all heard that. But we all thought that it meant that I had to go buy passive income, right? That's what we all thought. None of you thought we were going to wake up this morning and just our whole worldview was shifted and I don't have to make more revenue. I'd have to make my assets produce more. And if I could break my assets down into four different buckets and four different categories, I can achieve that. You didn't, you didn't know this morning that your balance sheet was more important than the income statement. That liquidity can be weaponized into four different layers that are used for all different purposes, different tools in the toolbox. You, you didn't understand this morning that there's a treasury doctrine that the wealthy use that most of the people, most of the world has never been taught. Never been taught. That's why there's 1% 99%.

Now, I had to jo, I'll tell you my story tomorrow, but after I watch "How to Build the Ad Master Groups," I knew there was a better way. I pay 50 grand, 80 grand to these groups, m group hill, and I had, I wanted to see what they were doing. Is what they're doing? We learned to save the world. Why? I think it's very urgent over the next 24 months. We x-ray our balance sheet. Now we got it classified. We understand how to manage the risk because tomorrow, going into what we're learn tomorrow, when we start talking about bolting on the supercharger and when we start talking about putting the nitroxide in, oh my god, is that so risky? Yeah, but we just learned how to mitigate all that risk. So now we have this treasury body. We need to go finish it. The 12 rules across four different categories in the treasury doctrine, the dormant capital, the lazy 100 capital, the bounty x-ray, uh, the liquidity stack, the fourth layers to be in the risk level. We didn't do anything all together. So now we have all that together. So tomorrow we can learn how to really grow. And my, I can't say my promise because there's a lot of people here and everybody's different, but I can tell you that most of you will leave tomorrow with the ability to make a million dollars in five years with no money out of your pocket. I'll show you a way. I can't, I can't promise everybody is going to be able to do it or most likely will do it because most of you guys love information but don't know what you're doing with it. But I'm going to show you the tools. I'm going to show you the plan and I'm going to show you the path. Okay. I'm going to give that to you. Now I've got dozens and dozens and dozens of way wealth engineering, wealth alchemy, where we move things that we never even saw access to and they could make 300, 500 millions for us. There's dozens of ways we can do this. I can't. Tomorrow's our day. I'll give you one or two, but there's enough.

Uh, Garrett is going to be here. Anybody know Garrett Anderson, multi-best-selling author? He's my tax ad. He helps work inside operating system. He's going to be here. He's amazing. You're going to love him. And my guess is typically the average amount of money he's able to get people back is about 100 grand. So remember this morning I said write down all the 50k ideas. Did anybody write any 50k ideas down today? One person. Okay. One person. I guess it's better than none. More than one. A couple. Okay. Three. Okay. I feel good about three. 300 thousand's not so bad. Uh, well, Garrett's going to come in. I'm joking. I see a lot coming in. Put the number in. 2, 3, 4, 1, 5, 0, 4. Okay. 42, 67, 42, 36, 1, 0. I'm sorry for getting late. 26, 5122, 100. Wow. 1, 2, 8. Okay. So, we got some good ones. We got good ones.

Uh, you know, if you have zero, it's the other day. Or this is not about making money. This isn't a course to make money. So, like if you're broke, you know, if you don't have income, this is not about how more income. So, uh, there's a lot of programs on, you know, I mentioned Cody Ego, she can help you buy more business, but even money, how you buy business, you have money. Um, so this is not a course on how to make money. This is a course on how you don't need to make any more money to get wealthy, but you need a little bit of assets. Do a little bit. So, you got zero, you probably have assets. But tomorrow, like I said, I'll show you most of you able to do. Garrett has typically able to find about 100 grand minimum in your couch cushions and we use that found money, that 100 grand at the couch cushions and 10x that. So we'll get that tomorrow.

Um, okay, so that's it. How to multiply the wealth without working harder. Uh, that's going to be the journey on wealth. Uh, I have more playbooks tomorrow, more templates. I'm going to give you that we're going to fill out in real time. Well, at least we'll have them for later. Uh, so you don't want to miss being here to see those. If you miss any of this, highly not advised because I'm answering your questions live and it's interactive. Highly advise if you do miss any of it. You can get the videos and you can get the um recording, stuff like that. There's a link to buy those if you want, but otherwise, be here live.

Um, and with that, I think we're going to, going to, going to wrap it up. I say everyone pat yourself on the back. Congratulations. It's really a big deal and I want you just to accept this for a second because most people receive information and feel good just because they think there's hope they could do something, they don't do it. If you're here, you spent all day with me, it was a lot and uh, that's a big step and now you got to keep stepping. All right, because it's close by. Tomorrow you're going to have a whole package, all the implementation and by day three on Friday, it's only half day because Friday we're going to cover early. But make sure you leave with a roadmap of what to do next.

All right guys, uh, with that, I think we go ahead and wrap it up. Please, please be here in the morning. Tomorrow, I'm going to kick off with a multiply session, going to get tax session, then implementation session, then we have a whole coaching session because I want you to get all this first and then we'll go into coaching so you can figure how to actually apply this to each of you. It's going to be amazing. So with that, um, let's sign it off. We're going to the VIP room for the VIPs. I'll see you over there. Everyone else, I'll see you in the morning. Like I always say, to your success, I'm out.

>> She said, "I never seen a man alone. If you pay the right price, your will be nice and you can go on my way." I said, "Just do this to yourself." She looked at me and this is what she said. "Ain't no rest for the money. I got to pay. I got to know down. Ain't no rest."