078-jerry-fetta

How Money Works and How to Use It

A discussion with financial wiz kid Jerry Fetta

John DeBevoise:

Greetings, everyone, and welcome to another serving of Bizness Soup Talk Radio. If it’s in business, it’s business soup. I’m your host, John DeBevoise. Today, we have Jerry Fetta, who is the CEO of Wealth DynamX. This young man is going to help us understand what money is and how it truly works, and how you can get the personal financial results similar to the super wealthy and the largest institutions. How? Well, we’re going to be building off the three points of money. That is wealth, income and results. So pay attention, pull up a chair, sit on down because we are serving up the management of money right here on Bizness Soup. 

Jerry, welcome to this serving of Bizness Soup. 

Jerry Fetta:Hey John. Thanks for having me on. 

John DeBevoise:It’s a pleasure to have you. Your home base is way up North, up in Alaska as you were telling me off-air that that’s where you’ve spent a lot of your life, but you also are traveling about. You’re down in California. We’re talking about your Wealth DynamX and I invited you on the program to talk about the understanding of how money works and how to use it. You’ve got three different triangulations of money. There’s the triangle of wealth, income and financial results. My audience, business owners, let’s talk about the breakdown in the triangle of wealth. How does that work? And what are some of the tips, tools, and techniques you can provide us from those super wealthy and larger institutions that you’ve worked with around the world? 

Jerry Fetta:Very good question. So, the triangle of wealth is actually something that I came up with a few years back and you hear a lot of variations of this. It seems like people try and reiterate the basic premises that money has operated on for hundreds and hundreds of years. So it comes down to, you’ve got to earn money, you’ve got to save money and you’ve got to invest money. And so that’s kind of what I started looking at on this triangle is, really, all three of these components have to be, and you’ve mentioned you have five points for business owners. Very similarly with finances, if I don’t earn money, I’m not going to have money to save. If I don’t save money, I’m not going to have money to invest. If I invest in something that doesn’t make money, then it doesn’t come back around and hit the earn again. And so that triangle would then stop. 

John DeBevoise:Well, everybody that listens to this show, myself and yourself, I’m sure, as well, when we start off on our goal, we don’t always end up or plan to end up where we’re at. I certainly didn’t expect to be a talk show host, but we take this journey and we’ve earned money, and then we learn how to save it and then, from that, we invest. I’ve always told my audience, pick something that you’re already doing and figure out how technology can improve it, make that wheel turn smoother, faster, by being able to put a spoke in that wheel. And once you put one spoke in, it’s amazing how many other spokes you can put in that wheel and you can capitalize on it. What are some of the areas that you are advising through your wealth dynamics to people who are saying, “You know what? Beam me up. How do I go about earning more money and how are you going to help me do that?” 

Jerry Fetta:Yeah, that’s a very good question. So I align with you quite a bit on that actually. So I tell people, income happens at the intersection of value and ability. 

John DeBevoise:Value and ability. Yeah, they’re okay. 

Jerry Fetta:I have a personal maxim that I operate with on investing and earning, and it’s “never give up known income for hoped for income”. And so, to your point, that’s one of the things I teach people is, “Let’s go back and look at how have you earned income? What are the things you’ve been doing? Because we’ve seen that that’s got track record and it’s proven. And then how do we first increase that? And then, again, how do we start to economize, take out some of the factors that may be slowing you down or causing resistance or friction so you can really get into a position of power with that income. And that could look like all sorts of things, but that’s the basic premise that I like to look at. 

John DeBevoise:Well, I have a brick and mortar store and people are coming and going out of my business, and I have, say, a gross income of, say, a hundred thousand or more with applicable margins within that walk-in traffic. And my money is going into the bank where it’s doing absolutely nothing. What are some of the top three strategies, if I’m a brick and mortar business person, a restaurateur, so that I might be able to do to maximize the return on the cash flow that I have coming into my business?§ 

Jerry Fetta:I think the first thing with that is, especially with 2020, I think brick and mortar has had to get out of the mindset of deciding they’re brick and mortar, so that might be something as, realized the business you’re in is not a business of location, it’s a business of a service being delivered. So is that clothing, is that convenience goods? What is the actual product? And if I’m brick and mortar, my best investment might be something that unlimits my ability to distribute that product without having to be brick and mortar, if somebody can’t come to my store or it’s more convenient for me to send it to them. So that’d be the first thing I’d look at. 

And then you mentioned saving money in the bank. You kind of hit it right on the head. I don’t like saving money in the bank. So I like putting money into accounts that I call them sacred accounts. They’re going to actually give me growth. They’re going to protect me from taxes. They’re going to protect me from liability. And, ultimately, the things that I’m going to leverage against to invest for passive income. 

John DeBevoise:Sacred savings. That sounds interesting. Give me an example of sacred savings. One that comes to my mind is the tax code. Maximizing the use of the tax code is like a government giving me a savings account. So what are some of the other sacred accounts that you’re referring to? 

Jerry Fetta:Totally. I love the tax code as well. The three that I usually will put money into physically. The first one is whole life insurance. So it’s been around for almost 170 years, 180 years, and it’s something that’ll give me tax-free growth and it’s going to give me a safety, security and just uninterrupted compounding. The other one that I like is actual physical gold and silver, and then the third one is actually real estate that I can borrow against and going to give me appreciation and cashflow and still availability of my equity to go invest it. 

John DeBevoise:It’s surprising just how much you can use a whole life plan. You get injured, you can get money back from that, which is tax-free. And then as long as you stay healthy and not injured, which is always a challenge in my industry of being in horses and cattle, you’ve got that money that is accruing interest and income, and you can borrow it back when needed. How’d you learn that at your age there? My kids don’t even know that. 

Jerry Fetta:So I’m 28 now. I started as a financial advisor at the age of 18. 

John DeBevoise:That wasn’t what I was doing when I was 18. I remember jamming myself in a single cab pickup truck going from one rodeo to the next. 

Jerry Fetta:That’s pretty exciting too, though. 

John DeBevoise:It was exciting. And I didn’t have quite the financial results of compound interest because, at the end of the night, I had no money. 

Jerry Fetta:So I’m 28 now. I started as a financial advisor and I was selling mutual funds and 401ks and term life insurance. I was a Dave Ramsey guy. And so I did that for a number of years, very successfully. And I came across the book that I read called The Creature from Jekyll Island. And have you read that before, John? 

John DeBevoise:Yes sir. 

Jerry Fetta:So that book, as you probably know then, it rocked my world. I didn’t know any of that stuff. I had all the federal licenses, never once was taught any of these things. So I started realizing what I was doing for people was not the actual solution and longterm, it couldn’t help them, which then led me to the question of, well, what could? And it’s funny, because I was a Dave Ramsey guy. 

John DeBevoise:Oh, yes. 

Jerry Fetta:As you may know, Dave Ramsey hates whole life insurance with a passion. 

John DeBevoise:Yes. 

Jerry Fetta:So I was on that camp. And as I did my research, I realized that whole life insurance is where wealthy people and where banks keep their money, and there’s data to show that. I think right now the top banks in the country have over $180 billion of their reserves, tier one reserves in whole life insurance. So it was kind of a weird slap in the face for me, but that’s how I came across it. 

John DeBevoise:One of the tax advantages I learned was to, in my business, in my corporation, is to buy a whole life policy on its CEO. Me. And so, the business bought the whole life and my shareholders, which don’t go very much further than my arm, are the beneficiaries of that whole life policy. And so that policy is out there, but the business bought it and I’m the indirect beneficiary. And as I tell everybody, never let your liabilities and your assets meet on the same page because I never met a lawyer that wasn’t willing to separate you from your success. The tax code, anything else in there, or any specialty tax codes that you like to work with? 

Jerry Fetta:Yeah. So with the tax code, that’s one that, it’s as creative as you want to be. I’ve found there’s so much in there that all you really have to do is go look, and you’re going to find ways to save money. For business owners, there’s a lot that’s there, but when you start into the upper echelons of the tax code and you get beyond your normal tax-deferred accounts and IRAs and those types of things. I really like charitable lead trusts, captive insurance agencies. There’s something called the conservative easement. 

John DeBevoise:Yes. 

Jerry Fetta:There’s a lot of types of assets you can put money into, or structures you can put money into, and reap some really good tax benefits and still have quite a bit of control over the money itself. 

John DeBevoise:Now, in your Wealth DynamX blueprint, you’d have quite the financial map. Gaining financial control, what does that mean in your Wealth DynamX blueprint? 

Jerry Fetta:Yeah. So gaining financial control is really the ability to start, change and stop flows of money. That’s going to be income and expenses. And so a mentor of mine growing up, he taught me the number one rule of finance is earn more than you spend and then always earn a lot. 

John DeBevoise:Yes. 

Jerry Fetta:Right? And so that’s financial control, is can I control my income? And then can I also control my expenses? What’s unique there is it’s not one or the other. You’ll hear a lot of schools of thought polarized to, “Hey, it’s earn, earn, earn, and don’t worry about the budget.” And then you’ll hear the opposite of, “It’s budget, budget, budget.” And then there’s really no talk of income. I believe in doing both, right? I’m going to earn a ton of money and then I’m also going to maintain good financial control and just like any company or corporation would, I’m going to make sure that I know what’s going out. I know it’s coming in. I’m planning for those things, and I have control over them. 

John DeBevoise:When is the right time to say no to Jerry Fetta? 

Jerry Fetta:For me, I have a rating system called the one to five game. So I rate my transaction. If I’m going to spend money, I rate it on a one to five scale. A one is dumb. So if I look at something and I’m like, man, that’s dumb. There’s no reason for it. It just doesn’t… It’s not going to help me whatsoever. That’s definitely a no. A two is bad timing, right? So I don’t need this now. So it’s going to be something that I’ll buy. A three as a maybe. Really, there’s no maybes. They’re just indecisive people. So early on, I had a lot of threes, right? And then a four is vital for survival. So that’s my food, clothing, shelter, transportation, education, personal health, those types of items. 

John DeBevoise:Right. 

Jerry Fetta:And I’m never going to say no to those. And then fives our income producing or tax reducing. I’m never going to say no to a five. So I rate that. And as you do it more and more, it just becomes second nature. They just don’t spend on ones, twos and threes. 

John DeBevoise:That’s a good five point to go with. The numb and dumb one was so much of my part of life in my early years, then the growing out of the numb and dumb is quite the transition in of itself. We talked about what you call number five is earn even more income. Well, what are some of the areas that you find in today’s technology are better areas to earn income and are they passive incomes? And if so, what are they? 

Jerry Fetta:For somebody that’s on number five, there’s a distinction there. So the second step of just earn income, that’s really any which way possible. That could mean selling stuff in my garage. It could mean donating blood. Just I needed to get money in the door. Five is more repeatable actions, things I can do long-term. For me, really, I think something online where I can be not tied down to a location. I can market. I can leverage social media. If possible, I would like to get into… If I’m just starting out, I would like to get into an area where I can earn income and do that, like I said, online, but also do that where I don’t have to physically buy an inventory or a product. So if I can be drop shipping things, if I can be selling something for a commission, something of that nature, that makes for a very streamlined business, because I don’t have the issues that come with a location and storing inventory or developing a product. And not saying somebody shouldn’t do those things, but I think a much easier barrier to entry is what I’ve mentioned. 

John DeBevoise:We’re talking with Jerry Fetta, who is the CEO of Wealth DynamX, on his young age and developing what he calls the DynamX Wealth Blueprint or the Wealth DynamX Blueprint. What are some of the areas that you find in real estate are the most advantageous for investment? Is it triple nets? Is it the single family detached income properties? Multifamily? What do you find to be the best opportunity in today’s economy? 

Jerry Fetta:I love that question. As a business owner, when I invest in real estate, I really do consider how passive is it? So my main money is my income, my business. I need to be focused on that, and I’ve seen a lot of people jump into fourplexes or real estate projects that they end up with a job, essentially. They make some cashflow, but also now they’re managing tenants and properties and it kind of distracts a person from the main thing that kind of got them there, which was the business. 

So I’m really a big fan of personally doing secured private lending. Again, I studied the bank, so I looked at… There’s got to be a reason, when I go to the bank to buy the real estate, they don’t want to be my partner. They just want me to use their money. 

John DeBevoise:Right. 

Jerry Fetta:And that was something I looked at and realized, well, it’s really the most pure form of passive income. I don’t have to fix anything. Nobody’s going to call me. If my contracts and documents are strong, then in a downside where they’ve stopped paying me, I can foreclose and sometimes even make more money than I put in. So that’s really my favorite way to go about it. 

John DeBevoise:So you’re investing in the future of the property, but you have security in that and you’re acting as the bank. 

Jerry Fetta:I am. Yeah. And I’m usually borrowing from my whole life insurance policy to do that. So I’m making money on both of them. 

John DeBevoise:However you’re being paid, you’re then making payments back to your whole life or do you just hold onto it and make the interest payments? 

Jerry Fetta:Yes. I’ll typically stick it back in my cash value. I’m going to keep it somewhere, so I might as well put it there because it’s going to reduce my interest on that loan. 

John DeBevoise:All right. That’s an excellent strategy there. The whole life is a hard money put down, whether it be a hundred thousand or more, but you’re borrowing from yourself to lend it out to others who are paying you a higher interest rate and you come back. 

Jerry Fetta:Exactly. 

John DeBevoise:And as long as you are worth more dead than alive, then you have job security. 

Jerry Fetta:Right. 

John DeBevoise:At what point did you discover or determine that, “Hey, you know what I’m doing? I can teach others.” And you created the Wealth DynamX. What was that moment when you were saying, “I can do this for others?” 

Jerry Fetta:Like I had mentioned, I started as just a traditional financial advisor, so I was kind of already helping people with money, but not in a way that it was actually bringing any sort of positive, measurable result in their lives. It’s kind of just the crapshoot of, “Hey, this 30 page document says you’ll be okay when you’re 60.” And that was kind of it. So when I started learning about The Creature from Jekyll Island and the federal reserve and all of this stuff, again, I realized that I wasn’t actually able to help people in the industry I was in. And my answer to that was seeing that between the central banking system and the tax system that we have, the way out was passive income. I realized, I don’t want to trade time for money, but that trade still kind of always has to happen, but it doesn’t have to be my time. I could go get assets that make that exchange for me, and then I can just unplug from the rat race. 

And so that’s kind of where I started as a financial advisor. I began looking at, “How can I help people get passive income?” For me, private lending and real estate were the things that I came across, and I started working with clients on helping them get into some of those real estate deals. And then I had to kind of really undercut, John. I realized most people didn’t actually have the money to do real estate. So now we’re on the conversation of people got to save money somewhere. And that’s where I came across the life insurance. And then if we undercut even more, then it was, well, people aren’t earning. I’ve got to know how to share what I’ve learned in business about selling and marketing and promotion, and be able to help others with that. 

To the very basic undercut of a lot of people don’t even know how money works. And that’s where we came out with our Wealth DynamicX University platform on, “Let’s really give people the truth that took me so long to learn it as a professional, but let’s give it to them right off the bat, so they can go in with this information.” 

John DeBevoise:You came up with the idea of Wealth DynamX and then it developed into these multiple tiered, three pronged or the triangles that you came up with. When did you discover this? Years ago? Months ago? When? 

Jerry Fetta:The triangles themselves? 

John DeBevoise:Yes. 

Jerry Fetta:Those have been over the course of years. So very gradually, I started really clarifying how money works and simplifying it and seeing that these really are the three points. And ironically, it came out to three points on all of them, so I didn’t even have the intention that there was going to be three triangles. I just realized there was. And so that was something that we kind of developed over the course of the years and put into our message on, “Hey, this is, again, the education and clarity. This is how money works. There’s lots of things, but if you remember these ones, you’re going to do well.” 

John DeBevoise:And if you’d like more information on what these triangles are, we have the triangle of wealth, the triangle of income and the triangle of financial results. You go through the website and you see a lot of work has gone into this and this young man’s development of these three triangles. It’s not so basic in its development, but it’s basic in its understanding, whether it be knowledge, money and its application in the financial results. 

Folks, if you’d like more information, you know the one source to get this from, and that at bizsoup.com, where business comes for business. There you’ll find this podcast, along with all of the others that we’ve done this year for Bizness Soup, as well as the transcript and the links over to Jerry’s Wealth DynamX. And if you’d like the triangles, well, just go to bizsoup.com, click on Jerry’s interview with Wealth DynamX and there you have it, folks. You can be in touch with Jerry. 

He has a program that will teach you all of these dynamics in a blueprint, and we make it available to you. And Jerry, I could go on forever on this subject because I’ve learned it the hard way, and I appreciate your perspective at such a young age and how well you have put this all together. Hats off to you, Jerry Fetta, from Wealth DynamX, and thanks for being on this serving of Bizness Soup. 

Jerry Fetta:Thank you, John.