https://www.youtube.com/watch?v=ZZZNsDs2G\_s

1 00:00:00.000 --\> 00:01:00.000 what's going on everyone it's alex and
moses here and if you're new to the channel um built three companies
that did 110 million dollars in sales and continued to do so now we
invest in other companies as well um and one of the talks i want to talk
about today is the money ladder uh and so this was actually came up
during a conversation i was having with layla my wife um and she was
like you should make a podcast about this she's like because you know a
lot of people don't know how this works and um so right now i'm writing
a handful of books around a one of them is kind of wealth beliefs that
that changed my life um and then i've got a bunch of books on
acquisition stuff that's coming out so what's the money ladder that's
what i'm calling it but basically it's the order in which people get
paid and a lot of times like one of the biggest beliefs in my life that
changed as i got wealthier and that changed before i got wealthy that
caused me to become more wealthy was how i viewed the flow of money all
right so what i mean by that is if you look at who gets paid when right
when money flows you can see typically where where and who is making who
has the most control and who's making the money all right so think about
it from a

2 00:01:00.000 --\> 00:02:00.000 concept of work and payment all right
so at the bottom here you have an employee in general all right and
there's nothing wrong with this right ever like i was an employee too so
like it's not that there's anything wrong it's more so that like this
you just have to understand how it works from a hierarchy standpoint
what happens with an employee is that they work first right they work
first and then they get paid two weeks later so they front their labor
they front their time and then they get paid two weeks later right or
four weeks later depending on what the job is right so that is if you
look at the money flow they have cost of time cost of effort that goes
out and then delay and then they get paid right now if you've got
somebody who's self-employed this is kind of like a lot of contractors
vendors gig economy etc these people typically there's they're trying to
choose scenarios here one is and and you can see because these people
are a little bit more flexible you'll see them kind of move on this
money ladder so on one on the

3 00:02:00.000 --\> 00:03:00.000 total i'd say worst side of the
equation the lowest side of the equation they basically model the same
thing that an employee would um that a normal employee would set up
which is they front the work and they get paid later right um later you
know if they get better and better and they become truly more
independent contractor type things then they might get paid half up
front and then half upon delivery right so it's kind of like 50 50 right
um and then later right then they start moving up this ladder some of
them will get paid up front or as they as they work etc right so the
next one is paid first right so think about this if you if you go to a
doctor right they don't do the surgery and then they get paid they get
paid and then they do the surgery right and so if you think about your
work like that or your business like that you get paid first right now
um this is where like payment plans and things like that like the more
someone pays upfront

4 00:03:00.000 --\> 00:04:00.000 and then i would say like in full right
that's another kind of mini variable here right are they paying somewhat
a front are they paying all upfront or whatever um getting paid first is
another level of kind of wealth and and kind of control and power all
right now but notice if you're looking at this from the video we've
still got we still got a little bit of ways to go up here right so then
about above this right this is kind of like this is kind of where i see
people ending and then you kind of get into like the business side of it
right so um above this you'd have like banks right so what do what do
banks get so banks have something called a capital stack so this is what
i mean by that is when you when you buy your house right you're actually
the bank's really buying your house and then you're paying the bank back
the bank is a preferred creditor what that means is if you know hits the
fan they get paid

5 00:04:00.000 --\> 00:05:00.000 first and then whatever is left over is
yours right that's how it works that's why you repay your mortgage when
you sell your house and then whatever's left over the scraps go to you
right banks get paid first they're preferred creditors and so when
you're thinking about like money in general look at where the exchange
flows right is who's fronting time and then getting paid or who's
splitting it up up front or who gets paid in full right and then if goes
bad who's the one who gets paid out first and who's left with the scraps
now i'd say that there's one one thing above banks here which i would
say is insurance this is really interesting i've learned a lot about
interns over last year so insurance is fascinating insurance gets paid
far before they ever have to do anything think about that you pay your
insurance for 20 years before they have to fulfill

6 00:05:00.000 --\> 00:06:00.000 what they are do and they also can not
end up having to fulfill anything and you just get paid they just get
paid for 20 years for truly doing nothing right if you really think
about how the money flows like really think about it for a second
imagine you have a business imagine i started signing people up for an
insurance business you know alex hormozy you know insurance um and i
just started going around saying hey i'll ensure your life hey i'll
enter your life hey you enter your life right and people just start
saying sure i'll sign up and they start paying me a thousand dollars a
month and i've got 100 families 500 families who start paying me a
thousand dollars 2 000 a month i'm doing a million dollars a month and i
do that for decades right and then as people you know come to term
because of how i wrote the contracts or whatever this is obviously a
shitty way of doing it but candidly it does happen um you know they
might not qualify or they can no longer afford the fees because i
increase the fees as they become higher and higher risk right of
actually me needing to fulfill this stuff so

7 00:06:00.000 --\> 00:07:00.000 the point is is that if you look at
insurance it's basically the opposite of a depreciating asset so when
you when you depreciate a building so you buy something and then you
depreciate in your tax a lot of people see that as a good thing it's
like oh yeah we can depreciate it that it's only a good thing because in
your mind because the tax code not because it's actually good that
things get old and become outdated right think about it so insurance is
the reverse of that so instead of putting all your capital up front and
then having depreciate something over time insurance companies get all
the money up front and then they get to appreciate the money over time
and then pay you off of that right and there's a reason that insurance
companies the oldest companies in the world the oldest ones are you know
180 200 300 years old and it's because that is a business model that is
unreal they even i mean they predate the tax code they don't have to pay
taxes so um interesting so when i think about this stuff um this was uh
this was uh hopefully this is valid to be valuable for you when you
think about um and you know actually i'll put i'll

8 00:07:00.000 --\> 00:08:00.000 put one level above this the top level
i'll say god and franchisors um obviously i'm not saying franchise words
are god it's kind of just being funny don't get personal all right and
so the last level above this is that god gets 10 off the top period for
life and so that's how you can see the money ladder right all the way at
the bottom people front their time from their effort from their labor
they delay and then they get paid they move up to self-employed they
front their time or they split you know they get half now half later um
and as they move up this ladder they get paid more up front right a lot
of that's because of demand because of how good you are right you're a
doctor you get paid first before you do your surgery right if you're if
you're a professional you're a great consultant something like that you
get paid up front right beyond that you've got banks who uh they get
paid first and

9 00:08:00.000 --\> 00:09:00.000 they they leave people to scraps
afterwards so that's when there's a defined pot of money above that
you've got insurance companies who get paid the whole time and then may
or may not ever have to fulfill on their their work right so them there
they get money guaranteed but the work that they have to fulfill on is
not guaranteed think about that right and then above that you've got god
um who gets 10 off top line of what you make so um i hope this was
valuable for you this is the money ladder as i see wealth and as i've as
i've thought of these things as time has gone on um i shifted my views
around it i changed the way we did agreements all that kind of stuff um
and so hopefully you find some value in it so this is one of the beliefs
that changed my life that um that made me a lot wealthier is watching
where the money flows watching where it goes and watching who gets paid
when keeping awesome bye
