The Debt Millionaire

by George Antone

specified interest rate. With a family bank, I’m able to recapture some of that $500k.” But

  that’s only true in his eyes. It gets better.

  Figure 37: Borrower’s Perspective

  So the borrower’s potential “savings” with a family bank is as much as $500k if they

  captured 100% of their interest (difficult to do). But that’s all the borrower “sees”—the

  amount of interest they can recapture. They are not used to seeing the banker’s side.

  Everyone that hears about the family bank can only see things from the borrower’s

  perspective because they have no other perspective to relate to, and therefore they make

  decisions about the family bank without seeing things from the banker’s perspective.

  On the other side, the banker owns a money moving program like a “machine” called

  the VOM that takes payments from each borrower and makes them grow exponentially!

  This “machine” on the right side can make $1,000 grow exponentially to over $20k in 40

  years at 8%. Imagine how large that $100k of the $500k a borrower now pays in interest

  could grow over a lifetime!

  That “machine” is called the VOM, or “Velocity of Money” machine.

  Applying the Velocity of Money process, you relend out the money, as soon as it is

  repaid, to other borrowers (or even same borrower) allowing that money to grow

  exponentially.

  Figure 38: Banker’s Perspective

  So if the bank made all that money from your $1,000, how much can they make in

  interest from your $500,000 over your lifetime? What about EACH of your kids $500,000

  of interest over their lifetime? What about the $500,000 from each of your siblings, your

  in-laws, your extended family members, etc.? Even if the total of all those $500,000

  interest payments was half saved and reinvested, that is still a significant amount!

  Really, that’s a LOT. LOT, LOT of money.

  So borrowers “see” the interest they can save, but they never see how much the

  banker can make from that same amount of money because of the banker’s VOM

  “machine.”

  But how does that relate to the family bank?

  Well, when you see how much you can “recapture”, it’s quite a bit, but when you own

  the family bank, you OWN the “machine” that can grow money exponentially. Remember,

  you are not just recapturing some of the interest you are paying other bankers, you now

  own the machine, the “Velocity of Money” machine that can grow your money

  exponentially by lending it to you and the other family members.

  So how does VOM grow your money exponentially?

  First, let’s describe what we mean by “velocity of money”. Velocity of money plays a

  very important role inside your family bank. I like to think of velocity of money as the

  “turning of the same money”. By “turning,” I mean lending, investing, or reinvesting the

  family bank money as quickly as it is returned to or is available in your bank. When you

  lend money including the “new money” (interest) you earned on previous loans you are

  “turning” that money. In other words, that new money, as you “turn” it (you add velocity

  to it), you are using it to acquire more and more assets or profits.

  This is discussed in more detail in my book The Banker’s Code. Here is a section from

  that book.

  So let’s look at an example.

  Assume two lenders, David and Steve lend out $60,000. Let’s assume the loan terms

  are as follows: $5,600 per month for 12 months. Here is what their income stream

  schedules look like.

  Table 17: David and Steve streams of income from their family bank

  They both started with $60,000 and ended up with $67,200 after 12 months. That’s a

  12% return.

  David decides to leave his monthly payments in the bank until he receives all his

  payments. So by the end of the 12 months, he would have $67,200.

  Steve, the smart lender, decides to ‘turn his money’ by lending it out as soon as it

  comes back. As soon as he receives the first payment of $5,600, he lends it out at 12%

  for 11 months, thus receiving $56 per month for 11 months (refer to the table below).

  Table 18: David and Steve streams of income in their family bank

  Steve ends up receiving $67,200 and the $616, resulting in a sum of $67,816. That’s a

  return of 13.03% when David is getting 12%. But, Steve does not stop there. He does

  the same thing for the next $5,600 payment he receives as well, resulting in another

  stream of income of $56 per month. He then does a ten month loan with that money.

  Table 19: David and Steve streams of income in their family bank. Steve is using velocity

  of money to make more money

  Steve ends up receiving three streams of income: $67,200, $616 and the $560,

  resulting in a sum of $68,376. That’s a return of 13.96% when David is getting 12%.

  However, Steve does not stop there. He does the same thing for every $5,600 payment

  he receives as well, which results in another stream of income for $56 per month for each

  one. He does that every single month, and in fact, his return percentage keeps going up

  as he continues to do so.

  Table 20: David and Steve streams of income in their family bank. Steve is using velocity

  of money to make more money

  David: $67,200 (12.00% return)

  Steve: $67,200 + $616 + $560 + $504 = $68,880 (14.80% return)

  The only difference between David, who is now getting 12%, and Steve, who is getting

  a much higher return, is that Steve is using the velocity of money. In fact, his strategy is

  simple. As soon as money is back in his bank account, he lends it right back out.

  Sometimes, it might sit idle for a few months, but he will lend it as soon as he has a

  chance.

  In fact, if you think about the above statement carefully, you realize that Steve is even

  relending the $56 right back out as soon as he receives it, making money on that money

  as well!

  Velocity of money increases your returns and allows your money to grow

  exponentially.

  Now, the reality is that you might not be able to lend the money right back out

  immediately as stated earlier. It might sit idle for a few months.

  So the VOM machine is used by the right side of the Wealth Equation, typically by

  banks etc. By shifting over and having a family bank, you now “own” this machine as

  well. But you will need to know how to run this VOM machine.

  So to wrap up this discussion, a family bank is not about moving money from one

  pocket to another. It’s a lot more than that. In fact, it’s about recapturing interest from

  family members in an exponential way.

  What we covered so far with the family bank is only the tip of the iceberg, the very tip.

  This is such an exciting strategy and goes well beyond the scope of this book.

  In fact, the “Family bank” is a whole new movement and I believe most families should

  have one. In fact, I personally believe in it so much that we created a company with the

  sole vision of reaching one million people by Dec 31, 2020, and have it take on a life of

  its own. We decided to do that by having families all over the world teach it to other

  families. This is done through a live and fun interactive game played in huge rooms with

  many players. This 2-day game is meant to bring families together with other families


  and have everyone learn together. My personal goal is that this is talked about in every

  neighborhood in the world. Even though it makes sense financially, the family bank is a

  LOT more than just money. It’s about relationships and the passing of knowledge and

  experience to your loved ones.

  Anyways, I digress.

  Again, there’s more advanced features that are not covered in this book. I just wanted

  to share with you some of the highlights of the family bank.

  Perhaps I’ll write a book on that someday.

  So why does this move you to the right side?

  The family bank in addition to the more advanced vaults allows you start moving to

  the right side of the Wealth Equation.

  Family Bank allows you to move to the right side of the Wealth Equation

  Remember the four forces? With a family bank you become the recipient of interest.

  You are recapturing your own interest, as well as your family members’ interest. On

  taxes, there are some tax-advantages of certain advanced vaults. Furthermore, the

  money in the advanced vault allows you to use the money in two places at the same time

  (opportunity cost). Refer to The Banker’s Code for more information. In terms of inflation,

  the advanced vaults allow you to use the same money in multiple places using the debt

  to beat the inflation rate.

  Table 21: The Family Bank Used Right Allows You to Move to the Right Side of Wealth

  Equation

  However, the critical point here is that you start your family bank. The primary power

  and benefit of the family bank is not the knowing the above process but rather actually

  doing the process. I strongly recommend you start your family bank with just a checking

  account and focus on doing the process regularly. Please refer to the resources page for

  more information on family banks.

  * * *

  That was simply amazing what my mentor described.

  So now what about the “family office?” I asked.

  “The richest families in the world have so much money that it makes no sense to have

  financial institutions manage their money. Imagine a family with a billion dollars, or $500

  million. They can afford to hire some of the smartest people on the planet to manage

  their wealth for them. That is a simple explanation of how a family office works. If a rich

  family has $250 million or less, a few families might share a family office. That’s called a

  multi-family office. A single family with its own family office is called a single-family

  office” my mentor went on.

  “The family office invests in various investments out there.”

  “However, all these family offices have a family bank at their core. And in fact, every

  family can benefit from their own family bank. You can be in debt, no debt, rich or poor,

  you can hugely benefit from the family bank” he said.

  Chapter Thirteen

  Putting it All Together

  A few days later, I walked into my mentor’s office.

  He was just finishing up a meeting related to some sky-scraper he was building in

  downtown San Jose.

  After some small talk, I asked him to help me put everything we covered during the

  lunch with Emile and his grandson together.

  It was a lot to absorb.

  * * *

  Let’s review where we started.

  We started by recognizing that the current method of investing used by the majority of

  the population and investors doesn’t work. The math shows that before taxes, inflation,

  and after fees, the returns needed just to break even are practically impossible to attain,

  and more importantly to maintain year after year in a compounding manner, and that is

  just to break even, not even build wealth! (Refer to chapter three).

  We then learned that the ultra-wealthy use a completely different method of investing

  called “The WealthQ Method” which challenges everything we know about investing. It

  goes against everything we have been told about investing!

  This new method is based on something called “The Wealth Equation” which identifies

  people as either being on the “Paying” side and the “Receiving” side. Most people are on

  the “Paying” side, and that simply means the financial system works AGAINST them,

  while the few on the right side, the “Receiving” side, understand how the system works,

  and have moved to the right side to make the system work for them automatically.

  In fact, the result of this powerful and advanced WealthQ Method is that the people on

  the “Paying” side, unbeknownst to them, are transferring their wealth to the people on

  the “Receiving” side. This is not done with bad intentions by the investors on the

  “Receiving” side, it is simply due to the investors’ lack of knowledge on the “Paying” side!

  Lack of knowledge in this case is very expensive!

  Inflation, Interest, Taxes and Opportunity Cost. These are four of the major forces

  (among others) that investors and the general population on the “Paying” side have to

  “combat”, and in fact spend all their lives combating these forces. The ultra-wealthy

  move to the right side, the “Receiving” side of these forces to make these forces work for

  them and therefore become wealthier easier.

  The investors on the “Paying” side focus on higher returns, low liquidity and riskier

  assets while investors on the “Receiving” side focus on more stable assets, higher liquidity but with well-structured debt and equity.

  To switch to the right side of The Wealth Equation, we recognize we need to use debt

  correctly. Debt used incorrectly can backfire and hurt us. Too much debt can really hurt

  us. Too little debt will only help you take a small incremental step towards the right side.

  One has to know and use debt effectively to switch to the right side.

  By using debt strategically and correctly, we also shift the work to someone on the left

  side. The people on the “Paying” side have to work harder and longer due to the system

  working against them.

  Again, lack of knowledge is very expensive!

  We also learned that it’s the debt that actually increases your purchasing power and

  not the asset. The rich focus on the strategic use of properly structured debt, while the

  average person on the left side of the WealthQ focuses on the asset. Those on the left

  keep looking for various assets trying to find the “right” asset that can generate higher

  returns, which in turn increases their risk.

  We then wrapped well-structured debt into a bigger “container” called “Capital

  Structure.” Capital Structure is simply how an asset is financed. In simple terms, this

  includes how much of the capital structure is debt and how much is equity. It is the use of

  the correct capital structure, called the “Optimum Capital Structure,” that allows us to use

  the proper amount (mix) of debt and equity in conjunction with the related asset. This in

  turn moves us to the right side of WealthQ, lowers our risk, gives us the best return for

  the risk we selected, and moves us towards the result we are seeking in the most

  efficient manner possible.

  I also introduced a term “Debt Millionaire” as someone who understands the lessons in

  this book; “The WealthQ Method,” and how to use debt strategically to move them to the

  “Receiving”
side of the WealthQ effectively.

  The challenge with all this is DEBT itself. We have been conditioned that it’s bad, it’s

  dangerous, and it’s fire!

  Unfortunately, we live in a world that is very different than the 1920’s. Money is

  printed in boatloads, with nothing to back it up except the trust of the people in the

  government. No gold. So many things are happening around us, and not dealing with this

  reality will hurt us. We are going to lose by ignoring reality, or even by “playing” with

  improperly structured debt and burning ourselves. Thankfully, there is one more option.

  We can educate ourselves. Don’t just rush out and start accumulating debt as that would

  surely hurt us more than we realize. We should take our time and educate ourselves.

  You can fear debt or you can choose to master it. You can keep working hard against

  the system or do something about it. Move to the right side. Your decision.

  The WealthQ Method was built from the ground up with the existing monetary system

  in mind to work for us instead of against us, and it is through education that we can play

  to effectively play this game of finance.

  Let’s compare people on both sides of the Wealth Equation. This is really comparing

  the traditional method of investing with the method mentioned in this book, The WealthQ

  Method:

  Table 22: Comparing Left Side and Right Side of WealthQ

  Where to Start?

  This book’s objective was to introduce you to a new method of investing. It can be

  overwhelming since a lot of it goes completely against what we have been taught.

  So the question is where to start?

  The best first three things to do are the following:

  1. Start and build your family bank. Keep it simple. Don’t complicate it.

  2. Practice by analyzing portfolios and identifying what can be done to move to the

  “Receiving” side of the WealthQ.

  3. Read this book again.

  Again, you can start with a relatively simple strategy such as “the family bank” that

  moves you towards being on the “Receiving” side. This book is obviously a lot more than

  just the family bank, but this is one of many possible first steps.

  Let’s look at some simple portfolios and see if you can identify if these people are on