Viral Finances: Fact or Fiction? – Ep. 267

Welcome to the Accumulating Wealth podcast. I’m Hunter Satterfield. And I’m Judson Crawford. We’re CPAs, wealth advisors, and partners at Cain Watters & Associates, a financial services firm here to help business owners navigate the decisions they face every day. 

You know, back in my day, if you needed advice, you went to a field or industry expert. Today, though, people are turning to self-proclaimed influencers on social media for guidance on everything, health and wellness, relationship, life hacks, and personal finance. You forgot about your go-to categories. Oh, yeah, cooking and makeup tutorials. That’s fair enough. But the real question is, how reliable is this advice, and where should we draw the line between entertainment and taking real financial action? 

Well, that’s what we’re digging into today. We’re breaking down viral financial clips, calling out what’s good, what’s bad, and what could actually hurt you if you follow it without context. That’s right. I think this might be a new annual episode. Amen. Let’s go. 

Okay, so Hunter, there is a Bankrate survey, and this is actually back in 2023, but a Bankrate survey found that 30% of Americans use social media for financial advice, which now makes it the third most popular source after number one, friends and family, which also has its issues, and second, financial advisors and professionals. 

And obviously, younger generations are even using it more. Gen Z is at 76% and millennials at 65% seeking financial advice through social media. So TikTok obviously has been rapidly growing as young adults’ go-to source for financial information, and content tagged with the hashtag FinTok has reached more than 1.4 billion views, which has led to the rise of so-called fin-fluencers. We’re finfluencers. We are most – we started looking at each other. There’s no way we’re finfluencers. No. But we should be, damn it. We should be.  

Now, this is what’s going to shock you after all that, is that while there’s obviously, all of these getting massive amounts of views, studies show that a large share of these TikTok finance videos are actually misleading or oversimplified. 

I know. I am shocked. I know. No, I actually am shocked because it should be way higher than 70%. That’s true. And this, listeners, these are all great stats, and Judson and I thought about this episode because no lie, we have had clients come in and swipe through their social media and ask our opinion on certain things, and we’re like- or send us one. Yeah. And we’re like, “We have to do this on the podcast. It’s going to be fun.”  

So here we go. So we actually get to listen to some today. Yeah. You listeners get to listen to some today, and we’re going to respond. And we – I have not even seen a couple of these, so this’ll be great, because you’re just going to get the raw, candid Hunter thoughts. Love it. All right, let’s go.  

Here’s why you should never pay off your house. Here’s your house. It’s worth $100,000. That’s what this stack is worth. And you’ve been told by Dave Ramsey and other people, “I have to get my house paid off because I’m going to be financially free.” False. Most people will accelerate getting their house paid off by throwing extra money on their 30-year mortgage.  

And maybe after 20 years you do it. You finally wipe it out. You own your house free and clear. I got news for you. What do you have for retirement? You got nothing for retirement because you put all your focus in getting your house paid off. Instead, mortgage that house, access the majority of this money. You know what I’d use it for? I’d go buy five more houses. 

Imagine those first five houses are each cash flowing $500 a month. But a few years later, you’re going to sell those five for 15 more, and you’re going to sell those 15 for 50 more. Now, imagine $500 coming off of every one of those houses. How many houses do you need to cover all of your expenses for the rest of your life? 

You could manage those homes yourself, or you could just hire a property management company, and guess what? They’ll do all of it for you. Now go ahead and pay off your house if you want, but until that happens, don’t. It’ll be the biggest mistake of your life.  

Oh my goodness. So you’re going to have 50 houses. Yep, $500 bucks a month, Giving you $25,000 a year in income. And the nice thing is that you- no, $25,000 a month. Yeah, $25,000 a month. Okay, I’m sorry. $25,000 a month.  

Well, and the nice thing I just learned in the video is that a management company will do all of it for you. Yeah. You won’t have to do anything. And it won’t end at that $500.  

I mean, it’s easy. Like, it’s so easy just to take five houses and buy five more, and then buy 15 more, and then buy 50 more. Okay, so listeners, here. Here’s the thing. When we first listened to this one, the first, like, 30 seconds, I’m like, “This guy- he’s great.” Yeah. He may be going down the right path. 

Don’t accelerate your mortgage payment, because then you have nothing left for retirement. He had stacks of bills on his table and he’s like, “Now you’re going to take that money,” and I was like, “Oh, he’s going to say create a diversified portfolio of mutual funds and ETFs in the public stock market.” 

Nope. No. Nope. Five houses. But here’s what you’re going to do. You’re going to take the five and you’re going to sell them for 15. Yeah. There’s no chance that anything happens in the- Taxes went into that, but it’s easy. It’s easy just to turn five to 15, 15 to 50, folks.  

All right, so couple issues I have with this, or we can just bounce back and forth. In all seriousness, listeners, one of the things I think, because we do get this a lot, of like, hey, mailbox money as they call it. I mean, the whole term there was that you’re in your mail- you’re sitting in your house and people are depositing checks in your mailbox, right? And so these $500 checks would be that exact mailbox money. 

The issue that you deal with here is, number one, you’ve got significant concentration risk, right? It avoids our second pillar of investment philosophy, which is diversification. And I think a lot of us can sniff that out pretty quickly that even if you could turn the five to 15 to 50, that means that almost all of it is tied up in these 50 homes. 

And while it may be nice to have the mailbox money, the reality is you are 100% tied to the housing market, which let’s see how that worked out in 2008, 2009, right? So I think you’ve got a diversification issue for sure. The second thing is that both Judson and I have owned rental property in the past, and the reality is it’s not easy. 

And we have clients that do it. I mean, it can become a full-time job even with a management company, especially when you have 50 properties, all the upkeep and all the administration that you have to do in all these different types of things. And so I remember very explicitly on one of the ones that I had when I was on vacation with my family in the summer, and the tenant called. 

I’m like packing the car to take the boys to the lake, and the tenant calls and says, “The hot water heater just burst. There’s water going everywhere. You need to take care of this today.” And I was like… I don’t care if you have a management company, I don’t care if you have somebody that helps you with it, the reality is it just ruined your vacation, right? 

And so I think my personal takeaway from this is, number one, diversification. Number two, it’s not that easy to do. And I think those two things are the big drawbacks here.  

Yeah, and I think the thing that bothered me the most is that the financial metrics just don’t work that way to where, like, you buy five houses and you make $500 per month on the houses, and then you sell them in five years and you have enough money to buy 15 houses. 

Like, that just doesn’t math. It maths in one market in the last 15 years, right? Or 20 years, where you basically were buying them pre-COVID, and then somehow you were selling them two years later. But then even then you can’t buy 15 more because then the… unless you’re going to a different area with less elevated prices. 

I mean- Right. I mean, the reality is that home prices don’t accelerate that fast, bottom line. And you don’t pay down debt that fast. You just can’t take the five and turn to 15 and into 50. So obviously there’s a ton wrong here with that, but unfortunately we get a lot of clients that ask us about it. 

Yeah. But the first 15, 25 seconds, great. Loved it. Check that guy out. Okay, on to number two.  

You see that right there? Randy Lambert, CEO of Fortress. I don’t do this as an ego thing. The reason I’m doing this is so I can write off my clothes, because clothing’s not tax deductible. But when you put your name on it or you put your signature on your shirt, it’s now a uniform. 

So I get to write off the clothes, I get to write off the cleaning, and because I get to write it off, I get to save more of my own hard-earned money. If you want to learn more about how to pay less in taxes, send me a DM  

Okay. Well, I’m just going to start with my first problem with it, which is if you watch this video, he was lying when he said it’s not about his ego. 

Just number one, like, that was just incorrect. That’s not FinTok but I mean, it’s clearly about his ego. Well, he’s a finfluencer so he has a right to say that. Golly. I have some words right now that I’m- producer Erin would not like me to use about this person. 

Okay, so here you have a really flashy guy who has had his signature embroidered on his cuffs and inside of his suit jacket, and he thinks he can deduct this as a uniform. How do you feel about this?  

No. It’s not allowed. No, it’s not allowed. That’s like saying, “I’m going to go wrap my $700,000 Lamborghini so I can write that off” when the IRS would just come and say, “Sure, you can deduct a car that you’ve wrapped, but you could probably have done it with a Honda Accord.” 100%.  

But there are two rules. If this guy actually looked up the IRS rules on what is allowable uniform deduction, it is required as a condition of your work, and it is not suitable for everyday wear, okay? Neither of which do his suits… I mean, maybe not suitable for everyday wear, but it’s not a required as a condition of his work that he have these nice suits with his name and his initials on it. 

So do people maybe get away with this? Sure. If it was actually looked at by the IRS, is it legally deductible? Absolutely not. No.  

And my favorite part of the video was probably the last one. “If you need more tax advice, just hit me up via DM.” Yeah, exactly. I think we can just leave this video alone based on that alone. 

I can positively say I’m not on social media, but I can positively say if I was, I’m not asking people to hit me up via DM for tax advice. But when you were watching that video, I was signing the label in the back of my pants, so you know.  

All right, on to video three.  

Listen, man, if you get a loan from a bank, bro, that going to take you about 20, 30 years to pay back. 

But if you rob the bank, you only get, like, 10 years. Come on, man, follow me for more financial advice.  

It’s solid. I mean, that’s solid thinking. The numbers check out. Yeah. I mean, that math maths so well done. Well done, FinTok. Okay, on to number four.  

Talking about how taxes work, so I’m going to help you guys out. This is going to be how you can avoid paying taxes on your trading payout. I have been trading prop firms for a while now, and this year I’ve made multiple six figures in payouts, and I will 100% be doing this. This is a method used by a lot of America’s wealthiest people, and when you see them paying next to nothing in taxes, there has to be something that they’re doing. This is that.  

A lot of prop firms will allow you to get paid out through crypto, which is an asset. Now, when you get paid out, it’ll normally be USDC, USDT, or some firms even allow Bitcoin and Ethereum. The point is these are assets that you hold, and the wealthiest people that are doing this are normally doing it with real estate, or they’re doing it with their stock portfolio, or even some of them doing crypto. 

What they are doing is they are taking loans against their assets, and because loans are non-taxable, what you can do is you can take a loan against your crypto. So instead of cashing out, sending it to your bank, and triggering capital gains, you can take a loan against the crypto that you have because that is your asset. 

And so you’ll only be paying interest, and that interest is going to be significantly less than you’d be paying in taxes. So because you took that loan, which is non-taxable, you’re not paying any taxes on the money that you gave yourself through the loan, but you are also still in one hundred percent control of the money that you have in your crypto. 

So the reason why this works is because you never sold anything, and the only income that you’re showing is a loan, which is non-taxable. That is why a lot of America’s wealthiest people never actually use their own money, and they are constantly taking out loans because if they could avoid using their own money or liquidating their own assets, of course, they’d rather just use somebody else’s money because the loans that they are taking are non-taxable.  

Okay, so it’s been verified. This kid just climbed in his car after getting his braces off, number one. That’s correct. It’s his Honda Accord his dad gave him. Yeah, 100%. But he has had multiple six-figure payouts this year. That’s right. Yeah, just like the wealthiest people in America. Yeah, exactly. This is where we are. Exactly. 

Well, and conceptually, Judson, he’s just talking about margin. That’s right. Which we’ve talked about on here before, where you can take a loan against your stock portfolio, and you can take those assets and that, that money and go make additional investments. And a lot of the logistics and operational things he talks about are accurate. 

Yes. I mean, it’s just margin. That’s all it is. In addition, he’s right. That is how the wealthy of the wealthy finance most things, right? They’ve got a loan portfolio that they can take out against their holdings. But he’s still wrong, and here’s how he’s wrong. He said, “You have 100% control of your money,” quote. 

He also said, “You have no need to liquidate your assets.” Okay, let’s just do a quick little math on that. Over the last three months, Judson, Ethereum, which he specifically mentioned, is only down 35%. Over the last three months, Bitcoin, which he also mentioned, is down 26%. Okay. So if you were on margin there, do you still have 100% control of your money? Do you still not have to liquidate your assets?  

No, because let’s say that after his first six-figure payout, he had $100,000. He can go take out a margin loan for $50,000, let’s say, 50% of the value of his Bitcoin or whatever he has, and then over the last three months, let’s say it goes down 35%, okay? 

Now his assets are only worth $65,000, which now whoever, whatever brokerage firm he has the margin against is saying, “Oh, wait, 50% of 65 is only 32.5. You have to pay us back $17,500.” Oops. So he does have to liquidate his assets? He has to liquidate his assets. Yeah. And fortunately, that’s the problem, because when-  

Actually, he probably doesn’t. It’s probably just sitting in his room because he’s still living in his parents’ basement. Good point, yeah. And I think that’s ultimately the problem. I mean, even if a bank allowed him to take 50% margin, which is probably not the case, I mean, you can usually take 50% to 70% against the S&P 500. Against crypto, it’s probably going to be less than that. 

If you have an opportunity, listeners, to take more than that, you should run away as fast as humanly possible, because in any day, Ethereum or Bitcoin can move up or down 8% to 10%, and you could get called on your margin literally overnight. And if you don’t have money to pay down the loan, you are toast. 

I think I’m beginning to see why these may be misleading or oversimplified. 70% of them at least. Let’s go. What’s next?  

Life insurance while you’re alive. It’s called life insurance, not death insurance. Let me show you why. So imagine your life insurance policy is a house. You see, every time you make a payment on your house, you build equity in the house. 

You can then use that equity for whatever you want by getting a home equity line of credit. See, but life insurance is way better. Check this out. With life insurance, when you put money in, you build equity in the form of cash value. That cash value is guaranteed to grow 100% tax-free. The money’s protected against judgment and lawsuit in most states. 

You can access the cash value at any time for whatever you want by taking a policy loan. But unlike your house, there is no credit checks required. There’s no financial statements required. Unlike your house, there’s no repayment terms required. You could take the money and buy a car, go on a vacation, or do an investment to make more money. And the whole time you’re doing this, you’re not interrupting your guaranteed compound growth.  

I see some oversimplification here. Let me just stop for a second. Okay. And I’d love to hear your opinion too. I’m sort of blown away because the SEC has pretty firm rules on “guarantees,” and this guy said that your life insurance is guarant- I wrote them down, guaranteed to grow 100% tax-free, which I actually don’t… 

Is it guaranteed to grow? Is it guaranteed to grow 100%? Or is it guaranteed to grow 100% tax-free? I’m really confused by this. He also said it’s not going to interrupt your “guaranteed compound growth”. Listeners, if you ever hear any advice anywhere, period, including from your Cain Watters advisor that says this is guaranteed, you should stop listening immediately. 

Okay, Judson, now over to you. Well, and you make some of the biggest points. I mean, okay, he very much made it sound like there are no consequences to taking out a loan against your life insurance cash value. That is incorrect. If you take a loan against the cash value of your life insurance, you are absolutely required to pay interest. 

It’s just that if you have enough cash value left, you can pay the interest out of either the continued growth of that cash value or by eating more into the cash value that you have. And there can be absolute requirements to pay back principal portions of those loans as well, depending on the life insurance policy. 

So in a lot of ways, it is just like a fricking loan, not completely different and totally free. But there’s no credit checks. Well, that’s very true, but the interest rate on these are, honestly, they’re not that great either. I know, but there’s no credit checks, Judson.  

Well, so I’m sure that a lot of people with really bad credit have tons of cash value in their life insurance. Exactly. That’s exactly what I was going to say. So, yeah. Well, I mean, there’s a lot, there’s obviously a lot going here, and I thought like, okay, as I was writing this down, he’s like, “If you have a HELOC, you can buy whatever you want with it,” which is kind of true, but kind of not. 

I mean, I have a HELOC, and when you go to set it up, the bank definitely fishes around for what you’re trying to do with it. But I mean, once you have it set up, you could certainly do whatever you want. And so I thought about it. I said, okay, look, if I go and I basically take out a HELOC against my home, and I go and do what he said, you can go buy a car with it. 

Okay, great. So I go buy the car, and over five years, this car goes down to where it’s not worth anything anymore. I still have the loan, and I have to service the loan with something, and yes, as he said, you can service it with the interest that you’re not taking from the cash value or you’re not building in the cash value. 

But you still are paying a loan. You’re still paying the loan with something. And so if you are taking it from the interest that’s not accruing in your life insurance policy, all that means is you are taking it from your future self. There’s just no, there’s no such thing as a free loan that’s out there. 

And the reality is that not only to your point, can the interest be a little bit punitive, but the whole problem with life insurance in the first place is that the gains and growth on that, this quote guaranteed growth that he’s talking about, is oftentimes much, much less than you would see in a mutual fund or ETF in the public stock market. 

And so not only are you putting it into something where now all of a sudden, you’ve got to go and pull a loan to do something, but you’re interrupting the opportunity to take that cash and go and compound it instead of at 5% per year, at 10% to 12% per year.  

So I didn’t look into this in particular finfluencer, okay? I don’t actually plan on it. But what percentage chance do you think that if you click on his profile that he would sell you a life insurance policy? I think it would be higher than 70%. Agreed. Okay, let’s go to the next one, producer Erin. I think it would be guaranteed 100 – no, guaranteed to grow 100% tax-free.  

Pay their debts efficiently, this is for you. Sit down, listen, and write this down. I’m a six-figure financial advisor, not your financial advisor, yet, and I’m going to walk you through three debt repayment methods that will bring you clarity, organization, and peace of mind. 

Two methods that you probably heard of and one that my clients love because it brings them relief pretty fast. The first is a snowball method where you tackle your smallest balance first. You pay off the smallest debt first, and you work your way up. It’s simple, it’s clean, it gives you quick emotional wins, and you can see and track your progress, which keeps you consistent. 

The second is the avalanche method, where you pay off the debts with the highest interest rate first. This method saves you the most money in the long term. You pay off the debt with the highest interest rate, and then you move down the list. It’s efficient, but the progress feels slow. 

The third is what I like to call the thaw method. This is my personal go-to. This is what I recommend to my clients who feel like they’re up to the neck with debt payments. You pay off the debt with the highest minimum payment first because the moment that debt is gone, your monthly budget loosens up immediately. If you’ve got $10,000 on a credit card with a $300 minimum and $30,000 on student loans with a $200 minimum, it makes more sense to eliminate that $300 burden in one year than to eliminate that $200 payment in six years. 

It boosts your cash flow and gives you more breathing room to move on to the next debt. Everybody has their priorities with debt payments, but the one that I like is about relief, momentum, and freeing up your money so that you can actually live or accelerate your debt-free journey quicker. But choose the method that fits your life, your stress level, your goals. 

Getting debt-free is as simple as having a plan. I can help you with that plan if you need it. Just reach out. 

Okay, I’m going to be honest, I like this guy I like him a lot. I just wish he would slow down. Well, okay, slow down. He’s so fast. But also, what is a six-figure financial advisor? Because we’ve had two people that really wanted to throw out six figures. 

Is it that he makes six figures? Is it that he has six figures invested under his management? I mean, what are we talking here? I don’t know. It’s very attractive to Gen Z’ers apparently. Or he can count six figures. Yeah no, I agree with you. Like, this is one that the snowball, avalanche, and thaw methods, we talk about all of these, and I think his presentation, while very quick talking, I wrote down a couple things that I loved. 

In the snowball method, he talked about emotional wins, right? And that brings in the emotion that we have to debt, and I think that’s a huge way to think about debt relief broadly. We’ve talked at length, I mean, we’ve done episodes on psychology around money and things like that, and so I loved that. 

In the avalanche method, he talked about, it’s super efficient, but it probably removes some of that emotion, which I loved. The thaw method is generally the one that we recommend. I don’t call it the thaw method, I just call it debt relief method. Smart. But that’s generally the one, because creating the payoff of those payments to where you have that cash flow I think is the most important. 

Well, I think the thaw method is really just a combination of the first two, right? And you have to be smart about it. So in the snowball method, you’re clearly going only after the lowest payment or what gets paid off first, whereas in the avalanche method, you’re trying to get higher dollar amounts to free up cash flow. 

There’s a combination in there somewhere that makes the most sense for our clients, right? Yeah, because it brings together the efficiency, which is what is ingrained in us as CPAs, with the emotion, which is what we talk about is really the success that you find in financial plans. And I loved at the end where, I mean, again, he aligns a lot with what we would say. 

I loved at the end where he just said, “Pick which method works best for you and your psychology, and reduces stress on you,” or whatever else it is. But probably my favorite part of the whole video, Judson, was when he said, “It’s about having a plan.” Bingo. Yeah. And you don’t have to use him for that plan, obviously. 

He’s a six-figure financial advisor. But he’d love for you to. But I think that’s why I liked it so much, that it’s like he said, “Having a plan.” And as we wrap this up, I mean, clearly we need to do these more. This is a blast. He was my favorite finfluencer. For sure. Other than me? Other than you. Thank you. 

I mean, of today’s videos. Oh, okay, got it. Because on YouTube we have our Shorts, and I’m on the YouTube Shorts. I could be a finfluencer. Yeah. You never know. 100%. We need to continue to do these, and again, it’s a balance between sort of laughing at it and breaking down some of the myths, but then also there can be some good things out there. 

And so I think it’s a great way for our listeners to say, “Okay, it’s okay to listen to this stuff.” I mean, I don’t personally listen to it because I think it’s a lot of nonsense. It’s okay to listen to it, but certainly you’ve got to do more investigation than just, “Oh, well, this guy, I mean, he looks like he knows what he’s talking about. I’m going to follow his tax advice in his DMs,” right?  

So anyway, a lot of fun, a whole lot of untruths, but little bit of truth, too. And bottom line, if you want to follow a fluencer, I think that the AWP podcast is, are the best fluencers out there. We are. There couldn’t possibly be better fluencers. 

So if you want to follow our fluence, hit subscribe. You never have to miss an episode. You can always go back and catch up on the ones you missed. Hey, listeners, it’s been a while since we’ve had a review, and we know that you’re still listening, so we’d love it if you’d go out, leave us a review on Apple Podcast. We’d love to know what you think. It helps more people reach us, and it would be a great Christmas gift for us.  

If you have any questions, comments, or even an idea for a future episode, reach out at cainwatters.com/wealth. We read them, and we do love replying. And if you want to learn more about what we do when we’re not behind the mic, visit cainwatters.com, where we’re helping more than 3,400 clients work towards their long-term financial goals. 

It’s not an ego thing, but it’s guaranteed to grow 100% tax-free. Get in my DMs. Oh, you’re an idiot.