Secrets to Creating Wealth On Any Income

Secrets to Creating Wealth On Any Income—with Rennie Gabriel

Our guest is Rennie Gabriel. He has a fascinating background story after two divorces and a business failure. He went from broke at age 50 to multimillionaire after learning only three secrets of wealth creation. He now donates 100% of his profits from his online programs to a charity. He is the bestselling author of the book called Wealth on Any Income that has been translated into eight languages. We had a fascinating time in this interview speaking about different topics about the difference between having money and creating wealth. Why every person regardless of your financial stage, you need to start thinking how could I create wealth for myself. At the same time learn from this fascinating story regardless of what age you are, there’s always a beginning to look at your future. More importantly, as he shares his inspiration for why he decided to donate 100% of his profits to a charity near and dear to his heart. There’s so much in this episode and I encourage you to go ahead and read.

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Rennie. Thank you so much for joining me on the show.

Thank you, Meny. It’s my pleasure to be here.

You and I have known each other for quite a while. We’re part of a mastermind group together that we constantly learn because nobody stops learning at any given age or time in their career. First of all, you have a fascinating background. Let me not give it away for the audience and I want the audience to read to you directly with your story because there’s so much in that story that an everyday entrepreneur business owner could relate to. Let’s start with that.

I’ve been an entrepreneur for most of my life. I started as a school teacher and found out I couldn’t earn a living to support my family with that and I went into sales. I earned designations in the financial services industry, owned a pension administration company, did business coaching for financial planning and accounting firms, owned a book publishing company, and I invested in real estate. At this point, I would probably have to admit that after all the financial education I received, a couple of divorces, and a business failure, I was flat broke at age 50 and had to start over from scratch. It was the investing in real estate that saved me and within about eight years, I became a multimillionaire. Now, when I’m training other people on how to handle money effectively, I’m giving away 100% of the profits to charity because I don’t need the income from helping other people for my lifestyle.

We’ll get into that part of the conversation later. There’s so much to learn from that. I want you to elaborate a little bit on the story part because at age 50, a lot of people start thinking about retiring and they’re looking at what they’ve earned. That was the first 50 years and start thinking about how they can start living at a beach, in their second home, or whatever it is. What motivated you after getting divorced multiple times, business failures, being at the age 50 and saying, “It’s just the beginning.”

At that time, I didn’t look at it as this is a wonderful beginning. What I looked at and said, “I’m 50, in fifteen years I’m 65, am I going to be eating cat food instead of tuna?” I’ve got to put it together at this point and I ended up having to make some decisions that were I would call them aggressive but calculated. It came first out of fear of what the future looked like. I was working seven days a week for the next several years to get things on track so I wouldn’t be having a destitute situation at age 65.

For our readers, this is an important point regardless of which age it is, if you look at the future and think for a second, “How do I want my future to look like?” That motivation sometimes you don’t have to listen to a motivational speaker. You can motivate yourself by pausing and looking at your personal future to see what do I want my future to look like and how could I improve that. That motivation sometimes could be better than any other motivation out there that could try to motivate you. For our readers, that’s a great point. You speak about wealth. I want to start with a fundamental question. Our readers would appreciate is that there is money, there is wealth.

I’ve worked with people who are earning $50,000 to $60,000, $800,000, $900,000 or $1 million a year. The variation in wealth is enormous and what I’m getting at is someone is earning a lot of money. It doesn’t mean that they have anything as a result of it. If someone’s earning $800,000 a year and spending $900,000 or $1 million a year on their lifestyle, that’s not going to work and I’ve seen it. People don’t have to earn a lot of money to become wealthy. As an example, when I was starting over, I was only earning $5,000 a month. By paying myself first $500 a month and intelligently investing that, I was able to move forward very quickly. It doesn’t take a lot of money to create wealth. It takes handling what comes appropriately.

[bctt tweet=”People don’t have to earn a lot of money to become wealthy.” via=”no”]

That was my follow-up question to that was, I wanted to ask is business owners are turning a lot of money and at the end of the day, they’re not making a living.

I’ve got an example of a building contractor. He was earning a good living, it’s about $300,000 a year at that time. I said, “One of the things you need to do is pay yourself first.” He says, “I can’t, by the time I cover the payroll and stuff I buy, the construction materials, and there’s nothing left over.” I said, “It’s an attitude that you’ve got that’s not going to support you and let me ask you, do you think you could take 1% off the top of the revenue that’s coming in and set that aside?” I’m talking 1%. He said, “I guess,” I had him doing that. He was able to go from 1% to 2% to 3%. Within six months, he had an additional $50,000 that he could use to make some investments on this own.

Would you say that a person that has a successful business, one of the things they have to work towards is putting away money that ultimately goes into building their portfolio, which might be real estate?

It could be real estate, stocks, bonds, triple net leases, and it could be anything but it’s the money. The concept’s 5,000 years old. When you and I are dust, this concept will still be working. It was outlined in the book, The Richest Man in Babylon, it was published over 100 years ago. I’m not talking about anything that’s new. I’m talking about something that’s stood the test of time for thousands of years.

What would you say is the number one reason why people don’t get to the stage of having a wealth?

It’s a mindset. It’s an idea that it’ll happen later or they can’t afford to do it now. The biggest block that I see is people who have debt, whether it’s credit card debt, business loans, and student loans, and it makes no difference, they say, “When I’ve paid this off, then I’ll begin investing.” The sad part is I hear that from CPAs. I hear that from some other financial gurus that, “You get rid of the credit card debt, it’s 18%, pay that off first,” that’s bad. It’s dangerous advice because the debt comes back and they never ended up getting to the point of investing.

What would be the advice you would give people that are reading this and starting to think about wealth building?

Regardless of whether they have debt or not, make the minimum payments on it and start an investment portfolio. Let me ask you, Meny. If you wanted to build muscles, would you go on a diet?

Probably depending on what the diet would look like if the diet would help me towards that goal or not.

Would you need to lift weights if you want to build muscles?

Of course.

I didn’t say anything about that, I just said about diet. If I look at people paying off credit card debt is dieting, thinking that’s going to lead to wealth and dieting will not lead to building muscles. You got to lift weights. Investing is the muscle part that I’m talking about. You’ve got to practice the result you want or produce. If you want to build wealth, you’ve got to start by saving money, investing money and learning that. It’s not about paying off debt. You could let me ask you another question, Meny. Let’s say that you had no debts, you had no credit card loans, no business loans, no car loans, and you had absolutely no debt. Would you have financial freedom?

Technically, the question comes back to if I’m living paycheck to paycheck, ultimately that’s not called financial freedom.

Even if you have no debts, you still have utilities to pay and groceries you want to buy or maybe you want to travel. If you own your home free and clear, there are still the property taxes and the insurance that requires an income. If it’s not coming from the assets that you created, then it’s coming from you having to continue to work. You don’t have financial freedom. When I hear people saying, you got to be debt-free. No, I’ve got millions of dollars of debt, but I’m not the one paying it. It’s coming from my investments.

Is that not something that we’ve heard gurus like Dave Ramsey, speaking about getting rid of all that and that should be the focus to never use a credit card and never use a loan. Is that not two sides of the equation?

Maybe that’s okay for Johnny Lunchbucket, but it is not okay for a business owner and for a C-Suite person, their CEO, CFO, COO, it makes no difference because we’re dealing with an attitude here. Even if we’re talking about Johnny Lunchbucket and he has no debt, if he hasn’t started paying himself first, if he hasn’t invested in stocks or mutual funds or real estate, he’s not going to have anything. He’s going to be debt-free.

Let’s speak about that person that’s reading and they say, “It’s time to start building my wealth and start investing.” The first thing that comes to mind is fair. I’ll put away this money, I’ll invest it in this one, everything put in all my eggs in one basket, and it’s not going to yield the return that I need to get. How do you overcome that?

It depends on what the person is thinking about like, “Where are they going to be putting it?” The lowest return I have in my portfolio is about 6.5% from a triple net lease, but I’ve got other things in my portfolio that are returning 15%, 20% and 25%. It’s a learning experience, being educated on what’s available. Wealthy people are not limited to stocks, bonds and mutual funds. There are so many other things out there from oil and gas investments, to real estate, to equipment leases, to owning your own building if you’re a business owner, there are trust deeds. There’s peer to peer lending. It just goes on and on but people think, “All it’s available are stocks, bonds and mutual funds.” That’s not the case.

[bctt tweet=”It doesn’t take a lot of money to create wealth. It just takes handling what comes in appropriately. ” via=”no”]

As far as when you speak to a business owner about investing in real estate, what is the risk tolerance you teach a person to focus on?

It’s along the lines of what I teach in my UCLA class. If you’re going to buy a piece of real estate and you’re going to have a tenant, that person has to be screened well, what’s their credit score, what’s their behavior, if it’s a multiunit residential what does it look like where they’re living now, are they slobs? Are they hoarders or they need people? Do they have the kind of job that will likely continue? Is it secure? Do they have reserves to continue paying the rent If they’re laid off? These are all the parts of an evaluation. I had invested in an office complex in the middle of the United States and we’ve got 90% occupancy where some office buildings are suffering because of this pandemic.

The businesses are finding out that they don’t need to have all the employees showing up. They could be just as productive at home, which means they don’t need the office space that they’ve rented. They could start letting that go and that hurts the person who owns the office building. You want to have the kind of businesses that good times or bad times are relatively recession-proof like one of the buildings that we have has the phone company in it. It doesn’t matter if we have a pandemic or not, the phone company still needs equipment to be operating. Renting it for equipment instead of people, it’s not that much of an issue. Even though I’m in commercial real estate and office buildings are doing terrible, this is an office park that’s still doing fine.

Are you speaking about diversifying your portfolio?

When you get started, you may not be able to, but as you grow, yes. The diversification’s valuable because one part of the portfolio could do well, the other part might not. I would say we’re probably 90% in real estate and 10% in equities, but that’s my comfort level. I’ve got control issues. If I’ve got General Motors or General Electric stock, I can make all the suggestions they’re going to pay attention to none of it.

Let’s speak about the award-winning book, Wealth on Any Income. Do you think there’s an opportunity to create wealth on any income? There are people live paycheck to paycheck. They can’t make ends meet by just the paycheck they’re receiving. How would you advise a person reading this blog to say even regardless of your income, regardless of how your cost of living, there is an opportunity for what to start building wealth?

If someone is working and earning a living, there’s the opportunity. If they’re on SSI or some disability payments, they’re not generating an income from what they’re doing. It’s going to be tough. The first 1/3 of the book is devoted to the attitudes that people have that are in the way of them producing success. The point is I got to deal with that first. Meny, do you know anyone who’s obese?

Yes, too many.

This is about knowledge. Do you think they have the knowledge of what it takes to lose weight?

The knowledge, yes.

What are the two most important things to lose weight?

Stop eating and exercise.

What I’m getting at is someone who’s obese and they know they should eat less and move around. It’s irrelevant. The knowledge does not create inspiration, transformation, motivation, nothing. What I’ve got to do is get in there and find out what are the person’s values, what’s important to them, and what can they lean on to make the changes that they want to make in their life. The first 1/3 of the book is devoted to what’s your thinking like, where did it come from, what did your parents tell you, what was the message you got, what are the goals that you have, and what are the values you have? If I don’t get that thinking straight, all the tips and techniques in the latter 2/3 of the book is a waste of print.

You’re saying that it starts with the knowledge and you could see people having that knowledge but not acting on it. It’s the thinking, it’s the belief, what tell the person, and what act on it immediately.

What do you need to do to act on it? It may be that you need to get someone else to support you. There’s a fabulous book called Change Anything that says there are six areas of support that allow people to transform anything from drug addiction to getting a raise at work. It involves understanding your personal motivation, getting support from other people, and looking at it from a society’s point of view. The point is wealth creation is a team sport. It’s not a solo sport. There’s no one I know who built a successful business where they don’t have a support structure in place. It doesn’t happen. Steve Jobs had Steve Wozniak, Warren Buffet has Charlie Munger, and Elon Musk has Brenna. It’s not a solo project.

What you could share on the attitude side on the first part of the book that usually is in the way of getting to wealth?

It’s the thing like being willing to ask for help and talking about it with other wealthy people. It could be hanging around people who have the attitudes or the financial wherewithal that you want to have in the future. It’s looking at the big picture before the details. I talked about a team approach. It’s recognizing that you want to build a net worth instead of reducing debt. Those are the kinds of attitudes I’m talking about.

For our readers, people always ask me the question about, “I’m stuck with my 9-to-5 job, or I have my business and I’m focused 100%. The money that I’m taking out is not enough.” We’re living in an economy that supports many value-added ventures by people doing something as a side project or a sidekick. Maybe the value could bring to the table based on your knowledge in this business. You could consult another company on the weekends or stuff like that. There are other opportunities as long as you make this a priority that you want to create some wealth on the side then you go back to the tactics to see, “I need to make it work. What are the things I need to put in place for it?”

[bctt tweet=”If you want to build wealth, you’ve got to start by saving money, investing money, and learning that it’s not about paying off debt.” via=”no”]

When someone says I’m stuck in a 9-to-5 job and therefore, I can’t do anything. That’s the limiting belief that someone has that’s holding them back. If I had a 9-to-5 job, that’s 8 hours, there are 24 hours in a day that means there’s a lot of time left with some sleep that you could still get tremendous results.

You started off the interview with that and you’re known for that. You became a multimillionaire. You’ve shared before about the real estate and how you got there. You do teach and programs that you have and you’re giving away 100% of that. That’s also a mindset. If you could share some of the thought process and how you arrive at that? Is that immediately decided to do that or that came with time? When we speak to successful people, at one point in their careers and in their life, they say, “What can I do give back for the community? How could I make the world a better place?” Sometimes the world a better place means your neighbor, your community, your students, or whatever it is. Share with me a little bit of thought process I think will be very valuable for our readers.

It was a funny evolution from the standpoint that I learned about joint venture work and I had my book that came out 10, 12 years earlier. I said, “I never done anything with it.” This would be an opportunity to expand it to more people and I said, “I’ll do some online work.” What I found was it was more effort than I was willing to put out because from a financial standpoint, I didn’t have to do it. I said, “I’m tired of this.” My wife who happened to be the chairperson of a charitable foundation with Berkshire Hathaway and she said, “Someone brought to me information about this charity called Shelter to Soldier.” She knew I’ve donated to veteran’s organizations and animal charities and stuff. She said, “I think you’d be interested in this one.” This is a charity that rescues dogs from environments where they could either die or be euthanized and trains them as service animals for soldiers who’ve come back with PTSD or Traumatic Brain Injuries.

Recognizing that our soldiers come back where they’re not treated and provided the resources they need to fully recover and become members of society and these dogs turn their lives around. The suicide rate among these returning soldiers is almost one an hour. Not one soldier who’s gotten a service dog has committed suicide. These dogs not only help them function but keep them from killing themselves. I said, “I don’t need the money from this online program but this is the inspiration I need to keep helping other people. I’ll give 100% of the profits to this charity.” I was going to give up the training because I didn’t need to do it and it was too much time. When I found a charity that meant so much to me now, I have a reason to do it. That’s why I continue to train other people how to handle money effectively, show them how to build their businesses, and how to increase their revenue, because I get to donate more money to the charity.

It almost gets me to tears because the world is a better place when we have people like you and somebody that’s was able to be successful in this world. There’s a time and a place to give back. When you find the why, it makes it so much easier. On one hand, you love teaching but you have the why every time you get on the phone or teach a course. You know the result, your passion is where the money is going to and it helps you. For our readers and any business owner out there, I’m always asked the question what if I don’t have passion to what I do, can I be successful? The answer is of course you could be successful, but you’ll never be as successful as you would have been with the passion because that driving force in making sure that not every stumbling block is a reason to quit is always there.

This guy was in pain. I couldn’t get him through to get the course right and do the training but I’m not doing it only because of this person. I’m doing it for the cause that’s behind it. I appreciate sharing the story. This will be an inspiration for our readers. Let’s close with four rapid-fire questions. Number one, a book that changed your life?

The Richest Man in Babylon.

Number two, a piece of advice you got that you never forget?

That wealth creation is a team sport, not a solo sport.

Number three, anything you wish you could go back and do differently?

I met my wife.

Number four. Final question, what’s still on your bucket list to achieve?

Being the number one donor to Shelter to Soldier.

Thank you so much for joining us. I know your time is valuable that is why in the name of our readers, we will forever be grateful for sharing some of your time with us. Thank you so much.

Thank you, Meny. It’s my pleasure.