Preserving Freedom Through Financial Independence

TRANSCRIPT

Mike Pine: [00:00:00] Welcome to the Hidden Money Podcast! Today, Kevin and I are excited to introduce to you Jay Johnson. He's a personal friend of ours, a client of ours, and just an amazing guy. He's a civil servant- he's a police officer. He puts his life on the line every day for us, normal people, and he's also pretty darn impressive when it comes to the concept of building financial freedom.

Jay's company is Code 3 Assets. Jay, welcome! Thanks for being here.

Jay Johnson: Hey, I appreciate you guys having me. Good to see you.

Mike Pine: Good to see you. Tell us a little bit about your background. Who is Jay Johnson, and what got you with started with Code 3 Assets, and what is Code 3 Assets?

Jay Johnson: Yeah. Thanks, Mike. I grew up in Wyoming, and out of high school, I went in the military. I was in the military about a year when 9/11 happened and I was living in England at the time, and shocker! life got busy, and moved around a lot. I love the military, love the culture, I love working as a team, love service, and when it came time to make a decision to leave, that [00:01:00] was probably one of the toughest decisions I've ever made,

and then ultimately ended up in law enforcement.

So, I guess, most of my after military adult life, I've always worked in law enforcement and also ran my companies, and that's been an interesting adventure. I'm coming up on 18 years now in law enforcement here in March, and in that capacity, I've been a patrol officer, been a general detective, I've ran school resource programs,

And then ultimately, over the last few years... what led me to Code 3 Assets and kind of branch off of construction, but that's it in a nutshell, my friend.

Mike Pine: That's an awesome background and a great story, but we definitely would like to hear why did you branch off to Code 3? What is the mission of Code 3? Because I think that mission is very similar to our mission here at Hidden Money. I'd love to hear more about that.

Jay Johnson: Yeah, it is. That's why I like shows. I consume a lot of stuff. I actually have a personal goal- I consume an hour of content. I try to make myself grow every day. So 350 hours a year, I track all that on a spreadsheet because i'm geeky like that, [00:02:00] but I consume a lot of content like you guys' show, and I love what you do because it fits with our mission. So, what we've started is Code 3 Assets, but that's the formal structural company, but really what I'm passionate about is a Code 3 American mission,

and that's a component inside of Code 3 Assets, which is the Code 3 American community. It's completely based on spreading the word of financial education, fellowship over divisiveness, real financial education, real wealth, all in the name of preserving freedom, I believe. Our mission statement is enriching humanity and preserving America through financial independence.

It's funny, for a long time I fought where I came from, and everybody should have a wife that they listen to. I have a wife- I was just too stupid to listen, and she kept telling me I need to own my story, and I was trying to not tell everybody that I was in law enforcement, because I didn't want to invite a bunch of political nonsense and debates about what's on the news, and all that.

I just wanted to live my business life and live my other life, and ultimately, where we found success is I [00:03:00] finally listened to her and we embraced the story and owned our history, and I realized that really they were synonymous. It's who I was or who I am- my whole life has been dedicated towards some degree of service.

I believe in contributing to something bigger than myself, and ultimately Code 3 was another way to do that. I have to face the fact that many years of wearing heavy kits and carrying rifles, and all that kind of stuff, working night shifts, it's tough, man, and I got to realize that age is going to force me from a uniform.

And I think that the sun is probably setting on that season of my life soon, but I didn't just want to do more business deals. I wanted to have a purpose. I wanted to have a mission, and so that's what I felt called to do. So, Code 3- what that means in emergency services- if you hear the term Code 3, it means an emergency response to a rapidly changing situation.

So, in other words, something's happening across city- Code 3's lights, sirens, everybody's going, we got to get there, we got to take action. We got to do something to intervene, and so, that's where the name come from. I look at the world like you guys do.

You guys are very analytical [00:04:00] folks, your tax folks. We all learned to look at the world through whatever lens we're trained to look at it through, and

I pulled it up for your show today in Forbes. Yeah, this is a 401(k) balance, but if you look at people age 60 to 65, the median balance in a 401(k) is $53,300. That's not going to work,

and you know, workers are being crushed.

The middle class is shrinking.

So, I look at it- maybe we empower that 35 year old nurse that her life's calling is to provide and care for others, but maybe we empower her to own real assets.

We give her the financial education, he or her, I guess, to give the financial education

and that's the underlying mission of the Code 3 American community.

So, sorry, I kind of monologued there on you. Long story, but that's what it is.

Kevin Schneider: Beautiful. No, it's beautiful, and you hit it right on. I think with that Forbes article, you're not going to have freedom with $58,000 in the coffers. You're going to bend and have to work.

So, the whole point is how can I get that financial freedom, and freedom being freedom to serve in an area you feel [00:05:00] confident in and that you want to serve it.

You don't want to just go to work for a paycheck- do something you're passionate about, and that passion can be freed up with kind of what you're talking about, Jay, is just having that ability to say, ' I don't have to do this because I have savings and I can sustain myself with a drop in income doing something else, if this goes against my beliefs.' -- It's beautiful.

Jay Johnson: Yeah, that's right, Kevin, and that's why it's funny,

I got the same web team that's built all my websites- I got a couple of different companies... and when we built this one, she finally emailed me. She says, 'Jay what are we doing here? All we're doing is pointing to other people.'

--There's one thing on there, one thing on the entire website that talks- that's a place people could find investments we're doing with Code 3 Assets. Other than that, the entire website is dedicated towards free resources and it points to people's podcasts. It points to books. It points to a number of things, and my whole point was, I thought I've been fortunate to

have a season of my life that provided me in such a [00:06:00] way that I could go out and afford to travel and meet folks like you, and put folks like you guys on my team, and meet a number of other people that have expanded my thinking. I took a lot of time- some are duds, some aren't, and I just thought, what if we could create a place that people could go and just plug into good content quicker?

And so that's what that became about, and that's what we do in the Code 3 American community. I set out to have a meetup every month where we bring a guest on. I figured out I didn't have the time for that, so we maybe try to do about once a quarter, but I try to do a lot of just free teaching, and then I believe if you put good things out into the world, good things will find you too.

And we'll do business with some folks, and some we don't, and that's okay. If they go do it in their own account, it's still advancing the mission. So, I really don't care as long as we're getting it done.

Kevin Schneider: Yeah, big overarching goal. That's good to have a mission like that. And Mike and I are in the same way as, being CPAs, we're boots on the ground, seeing this every day. I see probably, anywhere between 5 to 15 tax returns, depending on the season, a day, and [00:07:00] seeing the amount of either missed opportunities or seeing people grab the opportunities,

and it is a big mission to take money away from the government and give it to the people because that's where the change happens. I don't trust the government with taking our money and investing it, or I mean, look at our debt deficit- It's just not a thing

I want to keep putting my hard-earned money into, nor anybody else listening to this wants to say, 'Yeah, that's a cause I believe in.'

-- Just look at social security and the compact our government made with us under back when social security was created. The point was- you put money in, we're going to force you to take money out of your accounts to go through social security, but we're going to use that to create a social security trust- they call it a social security trust fund. That has zero money in it, but it's a trust fund.

Mike Pine: But, when we take that money, we're just going to put it into the government's general fund, and we might spend it on some things, which they've spent all of it... but eventually, when you get to retirement age, we're going to provide for your retirement.

Well, those people between 60 to [00:08:00] 65 that you mentioned from the Forbes article that have $50,000 or less in their retirement account, they're lucky if they're going to get $2,000 a month from social security, and social security is almost bankrupt. Why? Because the government is not good stewards of our money. We can be good stewards of our money. God calls us to be good stewards of anything that he provides us. Our government doesn't do stewardship. They spend it. Hopefully, in a lot of cases, I spend it on good things, but a lot of cases they just waste it.

So, wouldn't say that I don't trust our government. I trust our government to do some things really well, but when it comes to spending money and being stewards over our money, they're not going to do it, and it's our job as good stewards to siphon money or redirect money away from their waste coffers into things that build our economy, that grow our individual security, but that grow our national security.

That's our job. That's our mission.

Kevin Schneider: And with social security, just think about the system as a whole. [00:09:00] You pay social security tax in your working years. Everyone pays it if you have any earned income. Now, we could tax plan around reducing your FICA and your social security tax,

but when you start drawing on social security, they're going to be like, 'Oh, thanks.

You owe us tax on that as well.' --It makes zero sense.

And so, to your point of the $2,000- the inflation alone, $2,000 today... and they're not adjusting your social security draw of what inflation is showing, so you're losing so much money by investing in social security or doing anything regarding that now.

That's why, Jay, we need you out in the field with us because... this is going to get me heated... the Social Security Minister- I don't hate it, I mean it does provide a benefit to those who really do need it- I just think it could be done better.

Mike Pine: I mean, I'm 48 years old. The odds of me getting in a full of social security retirement at some point is slim to none. They're going to have to either reduce benefits, means test [00:10:00] benefits... I think I read something recently in 2035, they're going to have to cut benefits across the board by 60% in order to remain solvent...

so, we can't rely on it, and it's up to us to be self-reliant.

Jay Johnson: Yeah, I agree. And I think all this leads one place. I can't remember what the off balance sheet debt obligations are in the government, but it's just astronomical and it all leads one place. We did a video a while back maybe a year ago,

and it talks about inflation- and everybody's talking about inflation the last couple of years, of course- but inflation's a thing, they got a target. They got a target for a reason. they like inflation for the same reason real estate investors like debt. If they get a pay down government obligations with the larger volume of cheaper dollars, and they retire debt with it,

but the problem is inflation kills wage earners, and of course, that's been accelerated the last couple of years, but it's sad that a lot of people don't own real assets or things that move with the financial system- the monetary system, I should say, because we get conditioned [00:11:00] to... to think that we're not smart enough to figure it out.

That's other people that got to be able to figure that out. Those are financial advisors. That's a whole another thing to me. I think they're brokers, but not really advisors, but I think conditioning people towards weakness, and getting them just to accept defeat is sad, whereas folks like you guys, what you're doing on your show, what you're doing isn't rocket science.

You're saying success leaves clues. If you guys just do what other people have done, if you just follow the tax law, you know as Tom Wheelwright'd say, it's a roadmap to wealth.

Mike Pine: Yeah, I would go so far as say, I think what we saw with the mandatory shutdowns, mandatory vaccination, again, whether you're for it or against it, that was the Rubicon that once we cross that threshold, I realized that all these in quote unquote 'conspiracy' theories and concerns, and freaking out the last 30 years that I've heard, that I thought was a little too far out there, those are actually possible.

Not only possible, some of those things are actually happening. And again, the only defence [00:12:00] I can see to that, if you want to maintain some sort of freedom- freedom in what you want to do with your life, and how you're going to live your life, and where you're going to spend your time, is you've got to build financial freedom.

Otherwise you're owned.

Jay Johnson: Yeah.

There's a book called The One Thing. What's the one thing that's going to make everything else easier or unnecessary, and it's exactly what you just hit on, Mike.

Kevin Schneider: it's hard to say ever since 1776, the government's always acted in our best interest 100% of the time, all the time, and there's not been one deviation from that.

So, like I've said in prior podcasts, like you hinted at, Mike, there, you're in control of you.

So, worrying about the government is almost just like a treadmill.

You're going to do a lot of work, a lot of fatigue. You're not going anywhere. They're going to do what they want to do, but you're in control of who you are, and what you do, and the decisions you make. And Jay, I'm curious on your viewpoint on assets and you mentioned purchasing assets and getting, developing financial freedom... because I'll give credit to Kyle Gabhart, who's a financial advisor, who we've had on the [00:13:00] podcast before- he equates a well rounded portfolio looking like a farm. Back in the day, you would have a farm with different kinds of cattle that would serve different types of purposes. You would have meat cattle, so the cows you raise for meat production, that value of the market matters to you because you're going to want to buy your cattle or raise your cattle low costs and sell it when the market's high- get them butchered and get your revenue. But you're going to have your dairy cows- your dairy cows are just going to be constant income.

Market fluctuation doesn't care on the meat because your dairy cattle is going to be producing a certain amount of produce and income to you on a consistent basis. So, you have fixed income, but you have the variable- so, that looks like different things in the asset classes where you could have steady dividends in the market,

and that's going to provide a consistent income to you, but the market does need to be played a little bit. I feel like there is income to be made there, but at the same time, we need to get outside the market. We don't want everything in the market. You want [00:14:00] real estate. You're going to want some alternative investments.

So Jay, I'm curious on where you land on, your portfolio diversity, and then also, what assets do you recommend of getting into for financial freedom?

I like real and necessary assets. There's so many derivatives inside of Wall Street. I mean, you could have a million dollars worth of assets, actual assets on Main Street backing something, and through the financial wizardry, by the time it comes out the other end of the sausage factory, somehow it's worth $10 million, and there's just so many. It's literally betting when you're shorting things and you're making all these packaged-up financial derivatives, that's what I don't like about it.

Jay Johnson: It's just so heavily levered sometimes. That's what happened in 08, frankly. It really wasn't a housing problem.

It was a global contagion based on way over- levered...

Mike Pine: Derivatives.

Jay Johnson: Derivatives. Yeah. And so, I just don't like that. I don't like the fact that so few people control that much of it,

and at the end of the day, what are we serving? The world doesn't need Netflix, but [00:15:00] the world does need housing. They do need affordable housing, and they do need energy, and they do need food, and they do need necessary services and investments in infrastructure, and they do need small businesses for folks to go to work at.

So, I'm a big believer in real assets, and frankly, that's where you guys can do the most good, because the government, they know we need food. They know we need energy. They know we need housing, and they're going to reward folks, they're going to become an active partner with them

if they come alongside of them and produce those things.

I'm not a conspiracy guy at all and I'm not an anti-government guy. I've worked in government for 20 years- we have to have that.

We would implode without some sort of governing body, but I can also tell you government's the most inefficient thing in the world. I've worked in it forever, and they're not like business people.

On the assets, I think for me, personally, anything that's tax advantaged, that is rowing in the same direction of the folks that create policy. It seems like a pretty good way to go.

I'd rather have cashflow and tax benefits today than a hope of [00:16:00] something later, and start having to calculate inflation, adjusted returns and everything.

Kevin Schneider: That's great. Yeah. I'm in the same position as you. I do have a component where I do like the market. I do feel like retirement accounts can be a tax advantageous way to grow wealth, but not at the rate that I see in my clients and in my own personal life of investing outside of that.

Now, there's always caps on retirement accounts and they're not very high caps, so you got to start early. And that's why schools, when you go to college, they're like- Start your retirement early. Start your retirement early. Get in there because you're going to need 30, 40 years of growth to get there. You don't need 30, 40 years of growth

in real estate, depending on the market, it's going to be a lot more lucrative, but I do think that those bubbles do hit you personally quicker. If my retirement account dips, I'm not too concerned about it as much as when, if I hold a rental property and then the market goes down and I can't get somebody in there,

then that affects you [00:17:00] personally quicker.

That's why I always feel like it should be a balance, but I always lean more like 80-20. I want 20% in my retirement accounts market, but then I want 80% of my wealth outside of that, outside of Wall Street-

80-20, and it doesn't have to be this exact percentage, but 20% of your wealth in some sort of market retirement account or some sort of a mutual fund. Now, that other 80%, I like to be alternative investments, hard assets, real estate,

for example, or any other type of alternative investment, but I just feel like the impact of a down year in a retirement account is not felt as much to me because it's just paper.

To me it's just- Oh the 401(k) is down this year, but I'm not touching that for 40 years anyway, or 30 years, but the downswings on your alternative investments have a larger impact on you personally, quicker.

Mike Pine: Any ideas of the fact that you are still serving at a public servant's salary and you're able to do that [00:18:00] longer, maybe than you could have because of your financial freedom?

Jay Johnson:

So yeah, I was working on a public servant salary. I mean, I was a police officer. You don't become a cop to get rich, I can tell you that. I had to find a way to make enough money, not only to survive, but I didn't want to just

get by. So, the amount of self educating I did, I didn't learn any of that in school. I was surrounded by few people in my life, and certainly in my work environment, that understood what I would call real financial literacy, and I had to

figure that out the hard way. Like I said, at the beginning, you can see what my 1st job landed me, but I learned via the school of hard knocks, and what it afforded me to do is it afforded my wife to stay home, and when I'm off, we don't have to try to align multiple schedules.

If we want to go do something, we go do it. It's really been a blessing in that way. And I can remember specifically when the energy market crashed, I was supervising a patrol team that time, and I can remember we were told- you got to get overtime numbers to zero or [00:19:00] people are going to lose their jobs.

And this really hit me that I'm glad I did what I did because I can remember a person coming up to me and saying, 'Hey, everybody thinks you're being really hard on overtime.' -- And I said, 'Well, that's interesting. I don't know how much harder I can be. I just approved a few hours and the target zero, and it's no clearer than zero', --but I remember them telling me, ' That's easy for you to say.. Not all of us own a business.' --And I thought, 'Wow! I'm very thankful that I do in a time like this.' --And we don't have any consumer debt, and it's always allowed us to not only, I think, thrive as a family, and I don't just mean thrive in terms of economics-

I mean, thrive as in having the time and the resources to build relationships and invest in one another, and so forth. I think it's allowed us to do that, but it's also allowed me to thrive by having extra discretionary income that I could travel and get in groups of people that were performing at [00:20:00] exponentially greater levels than myself.

I think, how do you put a price on that? What's that worth, and what's the compound return on that? You know getting around to Kenny McElroy and having dinner with him, what is that worth in 20 years? It's hard to put a price on that.

I love your take on financial freedom, not just being economical, and from the way I was raised, and my dad listens to these, so I love you dad, but you know, we mowed our lawn every week. That was my job. I was his son and he taught me to mow the lawn every Saturday. I continued that all the way up till last year.

Kevin Schneider: Literally, I mowed my own lawn from last year. Now that I got two kids, a wife, two dogs, sporting events, and I'm like, 'All right, I got to wake up early and mow the lawn. I got to do this. This is something I've been trained I got to do.' -- And my wife actually just took it upon herself to say, 'No, we're outsourcing this.'

And I'm like, 'I'm not paying somebody to mow the lawn. I can do it. This is something I can do.' --It's something that it may take three hours, and in the summer it's not fun, and then I have [00:21:00] to rest for two hours because it's so exhausting, so maybe, it's a whole five hour ordeal. But I'm out of the family-

I'm not out of, I'm just not there. I'm not playing with the kids. I'm not going to the events or whatever it is because I'm doing all these tasks. But because of the financial freedom that we're building a firm and we're having good business here,

I'm okay with paying somebody to mow the lawn and I get that time back, and that is the impact that I'm seeing personally as well. It's just something as silly as that, that's providing me five hours more time with my family or doing whatever, anything, but that, even though it's been ingrained in me that if you can do it, just do it.

Jay Johnson: Before I met you guys, I joined Tom Wheelwright's WealthAbility program, and I thought I was just going to learn about taxes. The very first lesson was how to design a dream and how you want to live your life, and it really changed my life. It got me to focus on what I really wanted. It made me become clear on [00:22:00] what was important to me, and it all came down to human capital, every bit of it. I'm not a gadget person. I don't need a lot of material things. I just want a car that starts, I don't want to have to go jump the car in the winter, but other than that,

I'm a simple person and I just want time with people. I believe all babies are born- all they want is time, and all old people, all they want is time. It's all us in the middle that we get it all screwed up and we get busy and start wasting time away from each other. And I believe if life ends, that starts that way and ends that way, that's got to be what's important.

So, everything I do now, I learned through that program. What Tom essentially said is, 'I work with extremely successful people and they all think about the world this way.' --And it was all about how you use your time, and I used to think about the world of how do you make a dollar, and that really shifted.

Personally, I think it's become priceless for me.

Mike Pine: Jay, thank you so much for being here. It truly has been a pleasure. If anyone who's listened to this wants to reach out to you, wants to learn more about financial freedom, wants to learn more about how Code 3 [00:23:00] Assets mission might impact them or be available for them, how can they reach out to you?

Jay Johnson: Yeah. Thanks, Mike. Appreciate being here. It was a lot of fun. They could just send an email to american@code3assets.com. That's american@code3assets.com, and we'll give your listeners a few different things. We'll send them out a 1–4-unit deal analyzer they can have to help them with 1-4 unit residential properties.

And then, we got a Amazon No. 1 bestseller- I was blessed to be invited into a book called Next Level of Your Life, and there's some folks in there operating at way bigger levels than me. You can learn from them and happy to give you that in digital format.

And then we also got a report series called S.W.A.T. Lessons Learned- what my S.W.A.T. experience taught me about business life and investing. So, happy to give all your listeners that. So, anything we can do to advance the mission.

Mike Pine: There you have it- american@code3assets.com. I am sending that email now from my account. Jay, thank you so much for being here, man.

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