The Secret Life of BANKRUPT MILLIONAIRES...

Normally, I wouldn't make a video like this, but I find this story fascinating, so let's take all a moment of silence to feel bad for the millionaire homeowners that are feeling broke. Actually, they are broke, and that's what we're going to get into. Now, this story actually comes out of Canada, but it can easily be applied here in the United States because a lot of people are facing this similar issue, which is that you bought a house a long time ago for very little money, but it was in an area that has appreciated tremendously, and now the house is worth maybe a couple million dollars, a lot, far more than you've originally paid for the house. The problem is you were never a rich person, you never had a high salary, and you're living on a small fixed income in retirement, and that house that's worth a couple million dollars is your only real asset. So, you are basically broke, but because of your house, you're essentially rich. But it leads to a problem that a lot of people find themselves in when they're in this situation, which is that the only way to use that house to basically fuel your retirement is to tap the equity in some way or another, and there is no option that's actually cheap. And how this all begins is that usually it starts off with somebody who stretched their budget to buy a house to begin with, and they justify that stretching of the budget with the expectation of building wealth through home equity. And that is where this whole lie of the American dream comes in, right? And even financial experts will tell you that it's better to be a homeowner than a renter because if nothing else, if you save zero for retirement, at least you'll have that home, and if it's paid off when you retire, then you'll have an asset. You'll have something to pull money from, which is true, but it comes with a lot of catches and caveats. Because here's the thing, if you were to save for retirement using the traditional method, you have a 401k or Roth IRAs, different accounts like that, then you can essentially build up a lot of this money tax free. And when you make withdrawals in retirement, depending on the account, the withdrawals are 100% tax free because you already paid the tax. Or in the case of like a 401k, you do still have a tax to pay, but chances are you'll be in a lower income bracket than when you were working and you'll pay a much lower rate of tax than you would have otherwise. Also this money is liquid. You can convert that money in a Roth IRA or a 401k into cash in your checking account in a matter of just a couple of days. With home equity, it's not that simple. So this is what you call poor millionaire homeowners, people that have a lot of equity and not much of anything else. In fact, in Toronto, because this is where this story comes from, there's about 7,000 people who are 65 and older with poverty level incomes and homes that are worth more than $1 million. And what happens is a lot of people, they retire and it starts off okay. They're collecting a social security check. They're getting money out of their 401k, but then they realize that they're running out of savings faster than they thought. And now they look to their home for how can I extend this? How do I get more money out of this place? Obviously selling is the easiest thing to do. That's how you can easily cash out all of the equity. But then that puts you in a new position of where am I going to live? How much is it going to cost in the new place? And am I going to be able to afford that? You could be living in a house with no mortgage right now and just paying your property taxes and insurance that maybe add up to five, 800, even say $1,000 a month. And then you move out and now you got to rent a place for $2,000 a month or maybe even more depending on the area. So you could easily double your living expenses if you have to move. So that might not be an option for some, but here's the thing. If you want to pull any equity out of that house, it's going to come at a cost and that cost is going to be interest. That's why they have things like reverse mortgages or HELOCs or home equity lines of credit. Things like that. Those are instruments that allow you to borrow against your home and pull some of that equity out, but it comes at a cost. But if you're retired and you're living on a very low poverty level income, some of those options are not going to be available to you because lenders are not going to give you a home equity loan or a home equity line of credit if you don't have sufficient income to back up that loan. Because yes, the house is used as collateral, but ideally they're lending you that money so you can pay back the loan, not so they have to foreclose on the house one day to get the money back. That's like the last resort. That's not what lenders want to do. And the only thing you really could do is if you're already anticipating this problem and you're coming up on retirement, is you could get a home equity loan or a home equity line of credit before you retire and then retire and now you have that money. But the thing is, those are expensive sources of money. With a HELOC today, you could be paying anywhere between 7 and 9%. And once you retire, you might have a hard time making those payments when they're due. Here's the problem with this method of using your house in retirement to essentially live off of, is you're going to eventually going to reach a level where the interest payments are unsustainably high. You're going to get to a point where you actually cannot afford to make the payments because you're on a fixed income and you still got to pay for the other stuff, still got to pay for your insurance, you still got to pay for your groceries, your basic living expenses, et cetera. Also, you can only pull out a certain amount of equity depending on what the lender approves. It's not like you can pull out 100%. Even if your house is paid off free and clear, no lender is going to borrow you 100% of what the house is worth. It's going to be a percentage. So really the only option that a lot of senior citizens are left with who are in this scenario is a reverse mortgage. And the problem with reverse mortgages is that they are also another expensive form of borrowing and they come with a lot of caveats and requirements in order to keep your property up to a certain standard. And if you don't, they can foreclose on your property even if you're making the payments. So it comes with risk. Now you could just kind of borrow as you need it. You don't have to do a full on reverse mortgage of your property. You could just borrow maybe 20% of the equity if you think that's going to get you by for enough time and then maybe revisit borrowing more. Eventually, if you need to, that will keep your interest costs down and preserve some of the equity, especially if you're planning on passing that asset down to a loved one when you pass away. But really the lesson that people should learn from a situation like this is the following. When you're looking at buying a home today, you never want to be house poor. You never want to put yourself in a situation where you're basically throwing your entire net worth into that house and having no money left over saved for retirement because it can come back to bite you in the end. Some people do this on purpose, but it doesn't work out too well. Even when you have a substantial amount of equity built up, like in this case, like over a million dollars, borrowing that money doesn't come cheaply and it also puts you in a position where you didn't plan properly and you're kind of just stuck with whatever you have left. You're stuck with your savings plus the value of your home. And once that dries up, you're dead broke. And this is how people can essentially be a millionaire on paper, but be dead broke within a decade of retirement. You know who else is going to be dead broke is all these people who've been getting laid off guys over this past week. There have been more major layoff announcements and I didn't want to make a video just about that because I literally did that a week ago. But this is worth talking about because Nissan, they just announced that they are going to be cutting 20,000 jobs and that's a lot of people losing a high paying job. Nissan reported a quarterly loss of over $4.5 billion just in the first quarter of 2025. Now the lucky thing for these Nissan employees is they're not going to lose their job right away. This is going to be a layoff over the next four years between now and 2028. But that's just the plan right now. You know, if things get worse for Nissan, they could accelerate that layoff at any given time. That's just what they're saying at the moment. But you got to remember, Nissan's a company that's already been laying people off. You know, back in November last year, they cut 9,000 jobs. And so far this year in 2025, the stock has lost about 25% of its value. So things aren't looking too good for Nissan at the moment. Microsoft, they're another one. They just announced that they're going to be laying off more than 6,000 employees, which is 3% of its workforce. And Microsoft has been a heavy hitter with the layoffs over the past couple of years. Back in 2023, they laid off 10,000 employees. And last year, they laid off people as well. And once again, I just want to stress that these are good paying jobs that people are losing. These aren't just like some whatever jobs. And that's why you can't just look at these jobs reports and say, oh, wow, look at that. The jobs numbers went up. Look how many new jobs were created. Yeah, but what kind of jobs were created? That's what you should be really asking yourself. And if you want to know, I'll tell you what kind of jobs are created. You want a job right now? Go work for McDonald's. In fact, McDonald's is planning on hiring up to 375,000 employees in restaurants across the U.S. just this summer. This is the biggest hiring push that McDonald's has seen in the past five years. McDonald's also announced that it's going to be opening 900 new restaurants in the United States within the next two years by 2027, which is kind of ironic that this is happening because McDonald's is one of these companies that hasn't been doing too well over the past couple of years. There's been a huge boycott of fast food. People are tired of paying high prices for crap food. But to give you an idea of just how large this hiring spree is supposed to be, there's about 13,000 McDonald's locations in the United States, and all of them are expected to be hiring people. All of them. Guys, you need a job? McDonald's. There you go. But who wants to work at McDonald's? Apparently nobody, because it turns out that fast food restaurants have 100% turnover rates. What does that mean? Well, 100% turnover rate means that 100% of people who work there are going to end up quitting and working somewhere else at some point. Nobody is going to start and finish their career at McDonald's. Now that's not saying that that's the case for everybody, especially people who are in corporate or have better management positions. Those people are obviously more likely to stay. But in general, in the fast food industry, the turnover rate is 100%. So it's not a huge surprise that they're hiring. And don't say this type of job is too good for you. No, no, no. Because about one in eight Americans have worked at a McDonald's at some point in their life. My wife was actually one of them. That was her first job when she came to the United States. And unsurprisingly, she was their best employee ever. That's because she's been the best employee at every job that she's ever had before, because she just has amazing work ethic, even better than mine. Trust me. But like I said, they made this announcement that they're hiring all these people amid a huge sales decline that McDonald's has been going through. Earlier in May, they reported that it's had its largest three-month sales drop since the second quarter of 2020. Guys, what was happening in the second quarter of 2020? Oh, yeah. We were in the middle of a worldwide pandemic. And that's how bad things are now for McDonald's, just as bad as they were in the middle of a pandemic. And by the way, if you want to get a better job than working at McDonald's, I have a new company that I partnered with, Course Careers. They will actually walk you through, step by step, getting a much better job in today's economy, and actually show you which jobs are the ones to go for, because a lot of people are not hiring. So if you want a better job than McDonald's, I recommend checking out Course Careers. I have the link down below. But when it comes to McDonald's, the same store sales in the U.S. fell 3.6%, and they forecasted that it would only be a 1.7% drop. So they already knew it was going to come down, but it came down even more than they thought that it would. And that's the backlash. That is the protest that the average Joe has right now with McDonald's. People don't want to pay high prices for crappy fast food. If you're going to pay that much, you might as well go somewhere better or buy the nicer ingredients at the store and make your own food. Now when it comes to the tariffs, one of the biggest players who's been in the spotlight over the tariff situation, everybody's watching to see what they're going to do, has been Walmart. Because Walmart is the largest retailer in the U.S., and they have the most negotiating power with China and all of their suppliers. And when I previously talked about this, Walmart has been pressuring their Chinese suppliers to basically absorb all of the tariffs. And when we talked about that, it looked like that probably wasn't going to happen. It's probably going to be a mixture of both. Probably the supplier will absorb part of it, and Walmart will absorb part of it. And whatever the rest of it they don't want to absorb, they're going to pass along to their customers. Well, Walmart just came out and announced that that's exactly what they're going to do. Walmart's chief financial officer just came out this week and said that they plan to raise prices this month and early this summer, passing along some of the costs as tariff effective merchandise hits the store shelves. This is not a shocker. Everybody should have expected to see this one coming, if you've been following my channel anyways. And he even said that, you know, sales at Walmart have been strong and have actually been steadily on the rise in the latest quarter, but the full effect of the tariffs hasn't hit the shoppers yet. But that's what's going to happen starting this summer. And they're not sharing a profit forecast because they may choose to absorb more of the tariff costs in order to keep prices lower than their competitors, which is what Walmart is known for. And that's why so far Walmart has been kind of immune from this tariff shock, because they haven't literally seen it yet. People who shop at Walmart haven't been hit with any of the price increases just yet. But Walmart's probably going to do pretty well during this whole tariff war because they're getting the supplier to absorb a bunch of it. They're absorbing some of it, but they're also going to be passing a lot of it along to the consumer, which means that, you know, they're still going to be making a healthy profit and they're still going to see their sales continue to go up. But people are starting to shop more cautiously. People are trying to save money any way as possible. And that's why Walmart is actually benefiting from this as well. Because as more people leave shopping at more expensive stores like Target, they're moving over to stores like Walmart, trying to save a few dollars here and there where they can. Walmart even just said on Thursday this week that more high income household in the U.S. chose Walmart for their retailer of choice for buying groceries because of its low price store brand and rollbacks or the temporary deals. So I have no doubt that Walmart is going to fare well in this situation because people need most of the stuff that they buy at Walmart. A lot of the stuff is essentials. It's groceries, it's household supplies, all of the extra goodies that people don't really need. Yeah. Do they need to buy that? No. But Walmart can get by just fine without selling those items. And if you do want to buy them, they can pass along that extra expense of the tariff onto you. But let me know what you guys see. I personally don't shop at Walmart because the closest Walmart is pretty far away from where I live and I just have no desire to go there. I'd rather just buy the same things I can buy online and have them shipped to my door. But if you are a regular shopper at Walmart, keep an eye on the prices, guys. Let us know what you see over the next few months because they just announced they are going to be raising prices. And if you're a regular and you buy more or less the same things there monthly, then you're probably going to notice an increase in certain things. So keep track of it and let us know what you see. And if you enjoyed this video, make sure you subscribe to the channel. And if you don't want to wait for my next video to come out, check out this one on the screen right over here and I'll see you in the next one.