A lot of people believe that you have to have money to make money or that the rich always get richer and the poor get poorer. Monick Halm’s guest on today’s podcast is a perfect example of how that is not true. Abandoned by her parents, homeless, and eventually growing up in foster care taught Gena Lofton that financial literacy is one of the major problems in the world today. Gena is an investor, entrepreneur, author, speaker, and the Founder of Passive Income Advisors. Focus your attention on Gena as she shares her financial freedom formula and some steps to get out of the rat race.

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Listen to the podcast here:

The Financial Freedom Formula – Interview With Gena Lofton

I’m here with an incredible special guest, Gena Lofton. I’m super excited to have her here. She has an incredible rag to riches story and that’s no exaggeration. She’s a wonderful example of how having the right financial literacy can make an incredible difference. It doesn’t matter where you come from, you can create anything. She was abandoned by her parents as a child. She was homeless and eventually, grew up in foster care. Through that experience, it taught her that financial literacy is one of the major problems in the world. She earned through financial literacy and despite her humble beginnings, she’s already financially free. She worked at several corporate jobs. She spends her time traveling around the world speaking.

She’s investing and overseeing her assets, which consists of over 4,000 residential units, oil and gas investments, assisted living facilities, a resort in Belize, online business and natural resources companies. She is an AT&T shareholder. She used to work for AT&T. She is passionate about helping others achieve financial independence as she has. She’s the Founder of Passive Income Advisors, which created the Financial Freedom Formula. It’s an eLearning training program. She’s going to talk to us a little bit more about that. She’s the author of the book, Escape from Madness!: 10 Steps to Get Out of the Rat Race, which provides readers with the exact steps that she took to become financially free. I’m excited to have her here with us. Welcome, Gena.

Thank you, Monick. I’m glad to be here. I hope to provide as much value as I can to all of your readers.

I know you will. You have an incredible story. Tell us more about your story. How did you go from being a foster child to being where you’re at? How did you get started? How did you gain financial literacy?

Many of us started with that little purple book. It was the same for me, which is Cashflow or Robert Kiyosaki’s Rich Dad Poor Dad and you played the game CASHFLOW. I started the same with the same tools. I read that little purple book. I had always had incredible roles in Corporate America. I was working for some of the leading Fortune 100 companies across the globe. I loved what I did. I was fortunate that I had good jobs, but let’s back up a little bit to me being homeless. When I was a young girl, my parents were unable to take care of any of their kids. We grew up on the streets and subsequently in foster care.

I always wanted to have a home. For me, it was never wanting to depend upon anyone, whether that is a job, a man, government, or whomever for a roof over my head. I had to figure it out. At this time, there was no internet. We were still using encyclopedias. This was before there was Google. It’s probably hard to believe for many people, but once upon a time, there was no Google. You had to figure things out yourself. That’s what I did. I learned and I always liked being in real estate. I knew that I wanted a better life than I had, but I’m glad that I had that life.

It is because I grew up resilient and able to do things that many people didn’t grow up like I did, was I able to do. It didn’t matter to me what I had or didn’t have. I knew to go out there, hustle, and make something better for myself. That’s what I started from reading Rich Dad Poor Dad and the journey began. Even though I was homeless and in foster care, I did drop out of high school. I did go back and got an education because that’s what they said you’re supposed to do. You go to school, get a job, and work until you’re God knows what. I did it that way and I got an MBA. I learned to become financially literate, independent of the educational system, which is pathetic if you think about it.

It doesn’t teach you financial literacy at all.

No, it only teaches you how to go and get a job. That’s what it’s designed for. It’s to teach us how to get a job. One cannot teach what they don’t know themselves.

First of all, I want to praise you for what you were able to accomplish. You took that circumstance, it made you resilient, and you learned to hustle, but there are a lot of people who grew up in the same situation who did not end up where you are. There is something about you that you were able to pull yourself up by the bootstraps and learn. That’s impressive and incredible. What’s also great is, you’ve learned. You’re able to teach others that if you get the lessons, anyone can do it. What do you consider financial literacy? How would you define that?

I get this many times. What do I consider to be financial literacy? What I don’t consider it to be is managing your checkbook. That is far from it. That’s only a component of it. What I considered to be financial literacy is understanding basic mathematics, how taxes and money work, bonds, interest rates, and economics. Those are the basic big pieces and how all of it works together. Why is capitalism so important versus a socialist belief? I’m a capitalist and free-market person. I understand money in the monetary system and how it all works. That’s what I consider financial literacy.

It’s a lot more and a lot of people will say, “If you’re financially literate, you can manage your checkbook. You put a little bit into your savings account every month and don’t have credit card debt,” but it’s so much more.

That’s a good place to start. What is the definition? I don’t know if I’ve ever seen it defined. If I look, I know that I have my view of when I talk to people or partner with people, I can typically tell how financially literate they are or not. Usually, when they are financially illiterate, it’s the worst problem ever.

What do you mean by that? What’s an example?

When they’re financially illiterate, they are not watching the same exterior forces that are in place. As an example, right before the financial collapse for me, it was obvious. It was about to happen. For 95% of society, they didn’t know. All you needed to understand was basic supply and demand, economics and average incomes to support a house note. You could tell we were in a bubble. It’s a bigger bubble than what it was before, so that’s an example. That’s was all financial illiteracy and everything after the fact from the bailouts, the financial collapse, bankruptcies, and the people who say, “Not my President.”

All of that is financial illiteracy because they understood what our President was trying to do is to reduce taxes. They would say, “We want this as our President. He’s freeing me. I am free at last. Thank God Almighty, we are free at last.” Nobody’s saying that and that’s financial illiteracy at its finest there. Everyone’s looking to find Putin in wars and expose the Russian connection instead of focusing on the most important thing, which has nothing to do with Putin. They’ve kept everybody educated. It is what it is.

I want to ask you more about your Financial Freedom Formula and some steps to get out of the rat race. Before we do that, let’s back up. I’d love you to share your story on how you got started in real estate. You said you found the purple book, Rich Dad Poor Dad, which got many of us into real estate. What was your first real estate investment? Share a little bit about how you started and where you are now with real estate?

I always into real estate even before the purple book. If you’ve been homeless before, then you always want to make sure that you’re not my answer to that was to own the land. It was an answer to the problem that I was trying to solve. “The way to guarantee me not ever being homeless again is I better own it.” It was that simple. That was how I overcame the fear that I have of being homeless. It drove me to real estate. That’s how it happened. I didn’t know much. I bought some land in California and that was my first purchase of real estate to be quite honest with people, which I still own.

Only the land?

It was some land and it was all I could afford at the time. I didn’t have a lot of money. Back then, I wasn’t that savvy. Remember this was pre-Google. There was no internet where you can find out many things. There weren’t a lot of loans, etc. I wasn’t sophisticated to even get a loan or should there have been loans. It was like, “I could afford this and the seller would finance me for the land. This is my first step.” I bought some land. That was my first acquisition. That was the rationale behind it and why I did it. I know more nowadays. We always know later than we did then. I probably would have done something different than I did then, but it worked and I still own it. It’s an asset on my balance sheet. It is not a big deal. As time grew, I bought another place, a house in Southern California in the Valley. That was my first real property and I rented it out. Many of us start with that one house, condo, or whatever it is. We lived there for a while and rented it out. That was pretty much my first venture into something that has a building on it versus the land.

That’s when you first started doing cashflowing property.

That was my first one. I rented it out primarily because I used to work for a company called Ernst and Young, which at that time was the big six management consulting firm. I was going all over the world and I was only coming back to Los Angeles every weekend. I was like, “Why am I coming back here? It makes no sense.” That’s when I decided that while I rent it out, I will live in my corporate apartment wherever that might be. When I come back into town, I could stay with friends, family, or whomever. That’s what I did. After a couple of years of doing that, I was always savvy in real estate markets. I said, “If this is free, the Rich Dad Poor Dad.” This was in the mid-’90s.

Financial Freedom Formula: Financial literacy is understanding basic mathematics, how money and taxes work, and how bonds and interest rates work.

I always was looking at real estate because I always had an interest in it. I like the physicalness, building, and design. I always understood markets and the economics of it all. I kept looking at it. I was living all over the world and I came back. I was living in Brazil. I came back to the US and bought a place. Shortly thereafter, that’s when I read a little purple book. At this time, I realized that I had maybe 2 or 3 places that weren’t generating. I was not out of the rat race. I was from it. I probably had $1,000 of cashflow a month. I was at a firm working at this amazing career and this beautiful house on the hill, in the same area that I live in. I was like, “If I ever lose my job, I’ll be out of my house.” I didn’t understand that the house was a liability.

You didn’t know the difference between the asset and liability.

That’s the other piece of the biggest definition of financial literacy. It’s knowing what that is. Many people confuse the two. They call up liability, an asset like a house, which I was guilty of myself back then. It wasn’t until I read that little purple book that I realized that a house is not an asset. That’s when I began in earnest on my journey in pursuit of financial freedom. I waited and sold the house at the top of the market.

I know you have a Financial Freedom Formula Cheat Sheet. Tell us a little bit about the Financial Freedom Formula?

What I recognized years ago is that I had a situation where I had no money, yet I needed to make X amount of dollars in passive income. As an example, if you need $100,000 a year in passive income, you need $1 million earning 10%. If you don’t have either, you don’t have $1 million nor do you have an ability to earn 10% on your money, what does one do? After understanding what to do and how to do this and understanding all of the principles of Robert Kiyosaki and many others. The real formula for high-income earners, which is what I was. I made a lot of money in Corporate America on the left side of the quadrant. I hope your readers understand the four different ways in which money is earned. You have the left side, which is an employee and self-employed, and the right side, which is a business owner and investor.

I understood how I was earning income and was being taxed at the highest rate. If you’re taxed at 50%, which high-income earners living in high tax states such as California, New York, Maryland, Connecticut, DC, etc., you’d be paying upwards of 50% between federal and state combined. If that’s the case, you’re paying 50% in taxes and on a lucky day, if you live in one of the lower-cost states out of that list, let’s say you’re paying 40% of housing, which most people pay a higher percentage of that. You’re already at 80%. You haven’t bought food, insurance and haven’t done anything. You’re already at 80%. I’ve said to myself, “Why focus on saving $1 for milk? It makes no sense. Let me focus on the biggest expense,” which is tax. I’m a big picture person. I want to understand the low hanging fruit. Let me go after that big thing. Once I conquer that, then everything else falls into place.

You don’t have to save money by not buying a coffee every day. You’re like, “I’m going to save for my latte.”

That stuff makes little sense to me. Enjoy your life, buy your latte, or whatever if that’s what you like. Focus on reducing your biggest expense, which is your tax. Depending on how you make your money, it could be taxed. The financial freedom formula is about using debt, getting rid of debt, which is what I do, and reducing your taxes. Those were the two levers that enabled you to get to the right side. What formula is about. It’s identifying what your wealth number is. How long can you survive on your same standard of living if you were to lose your job? You need it to be infinite, whatever that is. If it’s $5,000, $10,000, $20,000 it doesn’t matter. Everybody has a number.

Focus on building or buying sufficient assets. That’s an asset is something that pays and feeds you every month that covers your monthly note. You get the cash for that by the savings via reducing your taxes. You get that tax rate down to 20% to 30% of whatever. That is the money that you have in order to use to invest. That’s the Financial Freedom Formula coupled with debt. This is one thing I want your readers to understand. What is shocking to me is how many people have not gotten filthy rich with free money. Money has been free for a decade. Seriously, it has. Ever since Obama went into the office, the financial collapse happened, so interest rates went down to zero. That was little a few years ago and money’s been free for almost a decade. If you can’t do it with free money, I don’t know when you can. It’s that simple.

I was talking to a Real Estate Investor Goddess. She was someone I was mentoring and she was saying, “My goal is to buy this property with 100% cash.” I was like, “Why? You can get money from the bank for nothing. Why wouldn’t you want to use that?” A lot of people have this myth around debt. It’s like, “Debt is bad. I want to have no debt.” It’s not necessarily. Debt can be useful if you can use that to build wealth.

That’s the financial literacy I’m talking about. Who would save money at 0%? That makes no sense, but people keep repeating the same thing that they hear on TV, “Save your money, get out of debt, and go to school.” If you keep repeating the same stuff without thinking about the meaning of it, does it make sense when they’re paying me 0% of my money? The inflation, even if you believe what the government is saying is 3%, even though I would argue it’s higher. Let’s say you believe it, you’re already losing money. That’s the financial illiteracy that I’m talking about. That is prevalent across the entire world. That’s simple.

Our time is running low, but this has been good. You too can be financially literate and learn the tools to get you out of the rat race. You can work or not work but you’re getting passive income every month enough to maintain your lifestyle, which should be everybody’s goal. Thank you, Gena. It’s been amazing.

You’re welcome.

Before we leave, I always like to get a trinity from our guests. A trinity is a brag or something you’re celebrating, gratitude, something you’re grateful for, and a desire. What’s one thing you’re celebrating? What’s the brag?

I could not get off this show without bragging about me being out of the rat race at a young age. That’s my bright point and my trinity.

Well bragged. That is awesome and especially given where you came from. That’s a beautiful brag. What are you grateful for?

I’m grateful for my background of growing up the way that I did because I am able to see things that many people can’t. It is because of how I grew up. I’m thankful for growing up in foster care, homeless, and in a not so conventional way because it’s given me tools that I’m realizing many people don’t have. I’m grateful for that.

What do you desire?

I desire two things. One is for everyone to become financially literate. I also desire that our President becomes successful in implementing all of his policies that will help make America great again by freeing the people. The most important thing is once you are able to keep more of your money, you might be able to achieve financial freedom. He’s letting people off the plantation if they choose to leave it. I hope our President is successful.

So may your desires be or better than you can imagine.

We’re blessed to have him.

Thank you, Gena.

Thank you so much for having me here.

I appreciate you being here.

That’s not a problem. I hope everyone received a lot of value.

Yes. I’m sure they will. It’s a super inspiring story. Check out the Financial Freedom Formula and the Passive Income Advisors group and get the book Escape the Madness!: 10 Steps to Get Out of the Rat Race. That’s our show. As always, keep it easy and pleasurable and catch us at the RealEstateInvestorGoddesses.com for more info and our blog. Get ready to get my new book, The Real Estate Investor Goddess Handbook. It is done. I am excited. That’s my brag. Have a great week everybody. Bye.

Important Links:

• Passive Income Advisors
• Escape from Madness!: 10 Steps to Get Out of the Rat Race
• Cashflow
• Rich Dad Poor Dad
• CASHFLOW – Online investment game
• The Real Estate Investor Goddess Handbook

About Gena

Gena Lofton achieved Financial Freedom by building and/or buying tax efficient income-producing assets with leverage. Since 2012 Gena has built a real estate portfolio of over 4,000 apartment units in four states and a resort in Ambergris Caye, Belize. She is an active investor across many asset classes such as assisted living facilities, operating oil and gas ventures, and junior mining/natural resource companies to name a few. She has transformed many Fortune 1000 companies across the globe, most recently, DIRECTV which was sold to AT&T for $48.5 billion in 2015. She is the author of Escape the Madness, The 10 Steps to Get Out of the Rat Race. She has never married and lives in Ladera Heights, California, a suburb of Los Angeles, California.