Buy Borrow Die: The Free Money Loophole Available Only For The Rich

Welcome to the ALOX.com podcast. The place where future billionaires come to get inspired. So, there's this running joke that a billionaire wouldn't bother picking up a hundred dollar bill off the ground because in the few seconds it takes, they would earn more just by standing still. But here's what most people get wrong. Billionaires don't earn money the way you think they do. When you see headlines of big CEOs earning tens of millions of dollars as a salary, they're not getting a single dollar in cash. It is all equity and it's never meant to be sold. This creates a system that can only be exploited by those who own assets. It's called buy, borrow, die. And this is how it works. Welcome to ALOX. The illusion of income. So most people think that wealth is about income, right? You work, you get paid, maybe you get a bonus, a raise, or even a pizza party from HR if things go well. Your financial life revolves around how much money hits your account every month. That's what you live on. That is your income. But that's not how the ultra-wealthy think about money. Now in fact, for them, income is a bit of a problem because income, as in money paid to you for your labor, is taxed aggressively. In the US, high earners can lose up to 37% of their income to federal taxes and even more when you add in state and payroll taxes. That is why the wealthiest people on earth avoid it completely, okay? Elon Musk got exactly $0 in pay from Tesla for multiple years. Warren Buffett gets paid $100,000 a year in base salary for the last 40 years. Jeff Bezos' salary for being the CEO of Amazon was around $80,000 a year. Mark Zuckerberg's base salary is $1. The list goes on, okay? You get the point. So, while most people earn in wages, the wealthy earn equity, meaning shares and companies they help to build or invest it in. Their wealth isn't sitting in checking accounts. It's tied up in stock, private businesses, investment funds and other appreciating assets. And none of that wealth is taxed as long as they don't sell anything. And this is where the tax system quietly benefits capital over labor. It's called the realization principle. So you don't pay tax on the gains of an asset until you sell it. So if your investment goes up in value, you're richer on paper but you owe nothing. Let's say you buy a house for $100,000. 20 years later, the same house is worth $1 million. Now, you don't suddenly have $1 million in your bank account, right? The value is locked in the property and you'd have to sell it to access the cash. And since you haven't sold anything, the IRS isn't going to show up asking for taxes just because the house increased in value on paper. That's what accountants call an unrealized gain. If you don't sell it, you don't pay taxes on it. And rich people never sell anything because the moment they sell, they trigger a tax bill. Now this is the kind of insider info a lot of people never get access to, but we give it to you for free here on YouTube. And if our free content is this good, just imagine what we're saving for the ALOX app. Curated lesson plans, expert-led courses, effectively, it's a mentor in your pocket making you better, stronger, and wiser every day. Thousands of entrepreneurs, CEOs, and high achievers like yourself are already using the ALOX app to make their lives better. We've even helped mint a few millionaires so far, but back to the topic at hand, shall we? So while most people chase income and get heavily taxed for it, the rich build structures that allow them to grow wealth silently without realizing it on paper. And this raises a question. If they aren't getting paid in cash and they never sell anything, how are they funding their lifestyles? I mean, some liquid cash has to come from somewhere, right? Well, they walk into a bank and ask for millions, and they get it, almost for free. That's where the real financial games begin, okay? Because when regular people take out loans, they get trapped in debt. When the rich take out loans, they get even richer and they stay that way. Welcome to the consumer debt trap. So when most people take out a loan, say for a house or a car, they're entering into a financial relationship where the terms are heavily stacked against them. The average U.S. household carries about $148,000 in mortgage debt, part of an almost $12.6 trillion total mortgage burden. And with the 30-year fixed mortgage rate hovering around 6.85% in mid-June 2025, nearly double the rate from two years ago? This is not easy debt. So let's just do the math, okay? A $250,000 mortgage at 6.85% over 30 years means monthly payments of about $1,600. Stick with that schedule and you'll repay around $576,000, more than double what you borrowed. The first decade is almost entirely interest. You're paying for the privilege of living somewhere, not building equity. Credit card rates often 18 to 25% strip away even more. Auto loans and student loans follow suit. You're paying triple-digit interest while barely chipping away at the principal. But that's only part of the burden. You pay those loan payments with after-tax income. So let's say your mortgage payment is $19,200 a year. To cover it, you need to earn about $29,500 before taxes if you're in the 35% bracket. That means you're paying income tax and interest simultaneously. And this double squeeze is why most people never escape the rat race. They take out loans with after-tax money and pay the bank interest on money they never fully get to use. Meanwhile, the bank assumes zero risk. They've collateralized your asset, whether it's your house, your car, or your business. If you miss enough payments, they take it back and resell it. You don't own your home, the bank does. You're just renting it from them until the final payment clears, decades later. This is how the system extracts value from the working and middle classes, and it's all happening because you are considered high risk. So here's something that most people don't realize, okay? The bank doesn't really care how much you earn. It cares how safe your money is. If you make $150,000 in a year but you've got no savings, no collateral, and a volatile job, you are a red flag, my friend. You might feel middle class, but to the bank, you're a walking liability. They check your credit score, your debt to income ratio, your employment history, everything that signals whether you'll make these payments reliably. That's why someone making $40,000 was a paid off house might be more bankable than someone earning $200,000 and drowning in credit card debt. This is why consumer loans have such high interest rates. You're paying for the perceived risk of lending it to you. And now we're finally getting to the buy/borrow/die strategy and what makes this possible. So the average person borrows a huge amount of money compared to what they own, to the point that it takes them literally decades of hard work to pay it back. This makes them high risk. To rich, on the other hand, borrow a small amount compared to what they currently have. This makes them low risk. And banks love them. So the buy/borrow/die strategy, essentially it works like this. You buy assets that appreciate in value and you never sell them. You borrow money against those assets so you've got money to spend. Then you die and everything resets. And this is how you do it in detail. So phase one is buy. It all begins with ownership, right? The wealthy don't aim to stack cash. They acquire appreciating assets, things that grow in value over time. This includes stocks, real estate, private businesses, intellectual property, and sometimes even fine art or farmland. The goal isn't to flip or sell these assets quickly. No, it is to hold onto them for as long as possible while they increase in value. That's why every big CEO is paid almost exclusively in stock options. The wealth isn't sitting in a bank account somewhere, it's compounding inside assets. And crucially, as long as those assets aren't sold, they're not taxed. This is the core idea behind unrealized capital gains. If your stock portfolio grows from $1 million to $5 million, that $4 million gain doesn't trigger any taxes unless you sell. On paper, you're wealthier, but the IRS doesn't care until you cash out. The same applies to real estate. Imagine buying property for $2 million. A decade later, it's worth $6 million. Unless you sell or refinance, no taxes are due on that $4 million appreciation. This allows wealth to snowball. But appreciation alone doesn't pay the bills. So what do you do if you're worth $100 million but you don't want to sell anything? That brings us to the next move. Phase two, borrow. And when you've got a sizable portfolio, banks are eager to help, okay? So let's say you own $100 million in Amazon stock or commercial real estate. You go to a private bank like Goldman Sachs or JPMorgan and say, "I want liquidity, but I don't want to sell." The banker smiles and says, "Well, let's set up a credit facility." They'll evaluate your holdings and offer you a line of credit based on a loan to value ratio, typically 50% for stocks, 60% to 70% for real estate and potentially higher for more stable holdings. So if you've got $100 million in real estate, the bank might give you 60 to 70 million as a low interest loan, secured by your assets, no capital gains tax, no selling required. This is the closest thing we have to literally free money. So let's make this concrete, okay? You take out a $50 million loan at 2.5% interest. You use $5 million for lifestyle, homes, jets, staff, philanthropy. You invest $20 million into new ventures or funds. And then you roll the rest into more appreciating assets. Your annual interest payment is $1.25 million and even that might be deductible if you structured it properly. Meanwhile, your original assets continue to grow. If they rise to $150 million over the next decade, you can borrow more refinance or restructure. You've effectively turned paper wealth into usable capital without triggering any taxes. This is the part where the rules most people live by simply don't apply. If a regular person borrows money, they're hit with high interest rates, monthly principal payments and wages that are taxed before debt is even paid. The system assumes you're a risk, but when you already own the assets, you are the collateral, you don't owe the bank anything, you're partnering with them. The bank is happy to give you a small interest because you're a constant source of cash flow for them. Wealthy bank clients borrow hundreds of millions, roll over loans for years and most likely use the same bank for investing, estate planning and family office services. So even at a 2-4% interest rate, that is a massive long-term income stream for the bank. That is why the rich pay less in interest, less in taxes and get more access to credit. Which brings us to the final act, phase 3, die. Because eventually, you will die and the last phase is triggered. So here's where the step up in basis comes in. So imagine grandpa, but $1 million worth of apple stock back in the 1990s. Over 30 years, that stock grows to be worth $10 million. If grandpa were to sell it while alive, he would owe capital gains tax on the $9 million profit, potentially 20% or more federally, plus state taxes. That's at least $1.8 million lost to taxes. But grandpa doesn't sell, instead he holds onto those shares until the end of his life and when he dies, something remarkable happens. Under the current U.S. tax law, the cost basis of those shares resets to their market value on the day of death. So instead of inheriting shares with a $1 million basis and $9 million in taxable gains, you now inherit them with a $10 million basis. You didn't "gain" anything, technically speaking, so if you sell the stock the next day, you owe $0 in capital gains tax. The tax liability vanished with grandpa. Now this same principle applies to real estate, businesses and other assets, as long as they're held until death and passed on correctly, often through trusts or estate planning vehicles. So what about the loans in all of this? In many cases, wealthy individuals take out large life insurance policies often held inside irrevocable trusts, specifically to pay off debt upon death. The insurance payout settles the outstanding loans. The heirs receive clean, unencumbered assets. The wealth transfer is smooth, tax advantaged, and precisely engineered. The original owner lived for decades borrowing against appreciating assets, paying minimal taxes, enjoying incredible liquidity, and then passed the wealth down to the next generation tax-free. No selling, no income, no capital gains, no estate tax, if planned properly. Stress is buy, borrow, die. Now at the end of the day, the game is pretty simple. Own the right things and the system works for you. Own nothing and you work for the system. Thanks for spending some time with us today my friend. We'll see you back here next time. Until then, take care. This was a great podcast today, wasn't it? Thank you for spending some time with us and taking another step toward improving the way you look at life. If you're hungry for more, you can always go to our website alux.com or subscribe to us on YouTube. The entire alux.com team wishes you a very productive day.