Most of us were conditioned to think that we only get to touch our retirement money when we’re old or else pay 30% in penalties and taxes to the IRS. How many of you knew that with self-directed retirement accounts, you can actually take that money and invest it, tax-free, in real estate or whatever asset you can think of? That is what Daniel Blue educates people in every day at Quest Education. In this episode, he joins in to tell us how he teaches people to best use their solo 401ks, self-directed IRAs and other retirement accounts to carve their own way to financial freedom. Daniel also shares important lessons that he learned on his journey from being a 19-year-old father struggling with addiction to becoming an entrepreneur that helps people make creative, life-changing financial decisions. Tune in for more!
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How To Create Your Path To Financial Freedom Using Self-Directed Retirement Accounts With Daniel Blue
Daniel is the owner of Quest Education, a company that helps entrepreneurs obtain capital for their companies, pay off high-interest debt and use self-directed retirement accounts to invest in alternative assets. With over many years of educating small business owners, Daniel has a knack for helping individuals get creative with their finances that lead to life-changing results. His story is unique in the sense that he had a daughter when he was nineteen years old and overcame an addiction to OxyContin shortly thereafter. Those two life-changing moments helped Daniel shape him into becoming the man he is now. Daniel, welcome to the show.
Sam, I appreciate you having me.
I’m excited to have you on. I get a lot of great energy out of you. I can tell that you love what you do, and you’re passionate about it, but if you don’t mind, give our readers a brief overview of where’d you start? Where are you now? Quickly, how did you get there?
When I was eighteen, it was a big year. Three major life events happened. One, I dropped out of college. Two, I got addicted to OxyContin, and three, I got a woman pregnant. At eighteen years old, welcome to adulthood and a lot of moving parts happening. If we rewind it, a lot of why I made some bad decisions when I was eighteen was because of my childhood.
If we look at trauma, adversity, anxiety or stress that you’re facing right now, a lot of that can be attributed to your childhood. We’re molding when we’re 8, 9, 10, 11, 12, 13 years old, that area. When I was twelve, my parents got divorced. I know that’s not special. However, what was unique about my situation is my dad ended up moving to Mexico when I was twelve.
They got divorced. My dad left. That was a heartbreak to me because my dad was like soccer and a basketball coach. He was the man. We were tight. All of a sudden, he was gone. He was gone forever. I didn’t have a lot of answers to all my questions. Now it’s my mom and me. Single mom in California, high cost of living, she’s working all the time. I don’t have a lot of supervision. I’m making a lot of knucklehead choices, ditching school and getting the drugs.
It wasn’t that surprising when I was eighteen years old that I was lost. I don’t know who I am. I don’t have core values. I’m looking at the wrong people. I didn’t have that compass. Those mistakes that I made when I was eighteen, they definitely shaped me. I don’t regret dropping out of college. There is someone who is reading now that’s probably making a lot of money that is an entrepreneur. They probably have people who work for them that have college degrees, and they don’t have a college degree. That’s the beauty of entrepreneurship. I don’t regret that. I don’t regret getting on drugs because, as much as I know, I hurt other people and myself, I learned a lot.
Getting addicted to OxyContin, for those that don’t know, OxyContin is essentially heroin in the form of pills. It’s some gnarly stuff. That taught me a ton about life and adversity. Getting clean off that was a journey in itself. I’ve been clean for several years. I wouldn’t change that. Having a kid at eighteen, I was a kid. A kid having a kid. I was scared. However, I got to learn a lot about myself and to have to grow up fast.
That’s wild. I don’t know if I’ve ever heard anyone say that they’re grateful even for the period of drugs in their life, but if you’ve turned that into a positive, then why not? It’s part of your story. Good for you for making that jump. Tell us, how did you get involved or start? I’m not sure if you started Quest Education or not. What was that journey like educating yourself financially? The picture you painted was fairly bleak. It’s like, “All right, eighteen making bad decisions, got a girl pregnant and now you’re on drugs.” How do you go from there to here?
I was eighteen years old when I dropped out of college. The big reason why I did that is I found sales. I had no idea that I would do good in sales. I was selling real estate coaching at eighteen years old. I made a hair under $100,000 as an eighteen-year-old kid. At nineteen years old, I crack the six-figure mark. It’s real estate coaching, infomercial leads, different biz opportunities, teaching people how to make money with tax liens, tax deeds and things of that nature.
It’s selling on the phone. I didn’t get in the nitty-gritty and taught people. I’m selling the coaching. It’s a high-paced, high-flying sales floor. That was a big reason why I got addicted to OxyContin. The people who are reading this are around sales floors or different environments. There are some good ones out there that have a good culture, positive vibe and are clean.
Unfortunately, if you watched Wolf of Wall Street, that’s real life. There’s a lot of that fast-paced stuff. I got sucked in. I’m making good money. However, I’m making bad decisions. I bought a house in 2008, right before the market crashed. We know how that ends. I lost that house. I made a bad decision there. Making enough bad choices, Sam, you get to a point where you touch the stove a certain amount of time and burn yourself.
I kept touching that stove. I kept living beyond my means. I’m not establishing credit and investing money. I started looking at other people that were in the same industry like myself. I’m twenty, but they’re 30, 40, and are making good money, but I don’t see a lot of hope. I don’t see that they have solid relationships. They’re not in the best health. They don’t have assets and passive income. They’re spending what they’re making and $5,000, $10,000 a week. They’re spending it. I’m like, “I don’t want that.” I know how it was affecting my bank account.
I started changing my habits once I got clean. I started saving a lot more than I was spending. I started building my credit and investing money. I was a “[9:00] to [5:00] employee” for a number of years. I got to network and learn running sales floors. I’m being in managerial positions, around other cultures and picking up things. Being in the financial game since I was eighteen years old, I started to learn a lot about self-directed retirement accounts and how people could access their retirement accounts penalty and tax tax-free.
I’ve been in this space for years. I got into this space when I was about 23, 24. I’ve been in the game for a little while now. A few years ago, I went all in and bet on myself. I maxed out 0% credit cards. I put a bunch of my own savings into the business. If you’re reading this, you can probably relate. There’s a point where you bet on yourself. You go all-in on your hand. You don’t know if it’s the best hand. You don’t know if you’re going to win, but you know what you don’t want.
What you don’t want is to work for someone else. You want to be the captain of your own ship and you’re confident in your ability to make it happen one way or the other. It hasn’t always been pretty. There have been some challenging times where I’m like, “What am I doing? Am I going to shut the business down next week?” However, you keep pushing and find a way to make it happen.
It’s the courage to do that. There are so many people that I think, unfortunately, will get to their 60s or 70s and say, “I wish I had at 29 taking that all in hand.” What Jim Rohn said, I’m going to ruin the quote, but it’s something like, “Failure weighs ounces, but regret weighs tons,” or something to that effect.
It’s true what you’re saying. We are going to regret it at the end of the day if we believe the hard part is doing it. That’s the beauty of business. You have to be willing to take risks. A lot of people aren’t willing to take that risk and that’s why they’re in the same position that they’ve always been in. They wanted to make a change, but that risk is holding them back.
What do you feel are some of the fruits of taking a risk without knowing the reward have been for you?
One, I think it’s important that people remember that when you’re scared of failing, taking that risk, remind yourself what’s the worst that can happen? My worst-case scenario is I know I could go back to sales. I know I could sell anything. I can go to a plumbing company or a roofing company. I need to learn a little bit more about the knowledge, the actual product and service, but sales are still sales. It’s communicating, listening, understanding and solving problems.
There’s a point where you have to bet on yourself and go all in. You don’t know if you’re going to win; you just know what you don’t want. And what you don’t want is to work for someone else.
I always knew that worst-case scenario, if I could figure out this business stuff, I could fall back. I can go back to where I was. People lose sight of that. It’s like, “If you lose or fail, you’re going to go back to where you were before.” It’s like, “That’s not as bad as you think it was,” but it’s still a big enough reason to make that change. It’s why you’re going all in. The fruit is time freedom. We all want the same thing, whether you are selling commercial real estate, stuff online or you have a franchise, whatever your business is or you’re selling, your project is.
You want time freedom. You want to be able to take your family on vacation and be gone for two weeks if you want to in a random month. You want to be able to do the things that you want to do when you want to do them. You do have to have money to purchase time. You have to have some money coming in in order to use that time as leverage to have time freedom. I’ve been able to have some of that, not as much as I’d like, obviously a few years into a business, that’s not a long time.
I look at it business as a kid and as a human being. My business is a toddler. It’s walking on its own. There are going to be some stumblings. Your three-year-old toddler hits his head on the coffee table and cries. That stuff’s still going to happen. You got to remember. The longer you’re in business, the more you can stay in your business. Your business starts to become 10, 12 years old, gets a driver’s license, and becomes an adult. I’m getting more and more of that time freedom as I start hiring and delegating more, get more systems in place and start building out my team.
We could take a left turn into that. We talked about those topics quite a bit. I’d love more to focus on what your business does. Before we even get into that, how you picked it?
When I started selling real estate coaching when I was eighteen years old, I started surrounding myself with people talking about, “I use my retirement account to flip a house. I used my retirement accounts to buy a property.” That thought intrigued me because I always thought 401(k)(s) and IRAs are for the use of stocks and mutual funds. I didn’t think you could use your retirement account to purchase real estate. The term self-directed retirement account was planted in my head. At that time, I’m like, “That world fascinates me. I’d love to get into that world at some point in time.”
I’m not your typical individual from the financial space in the sense that most people that own financial companies are college-educated. A lot of them come from money. Their family had money. They have a suit. They’re 40, 50 years old. I’m a college dropout. My family didn’t come from money. What I can say that’s helped me become who I am is having relationships. We’re only one relationship away from leveling up your personal, financial and business lives.
You’re only one relationship away and that one relationship might not even be that one that opens up the door that gives you more business. That one relationship might introduce you to someone else. That someone else introduces you to another person. That one relationship was what got it going. Don’t ever discount that. For me, it was all about relationships as I started getting into the self-directed retirement account world, meeting different people and had different opportunities to work for companies in the self-directed retirement account space.
I was an employee in the self-directed retirement account world for a number of years before I opened up my business years ago. Through Quest Education and my company, we’re able to teach people how they can access money in their retirement account penalty and tax-free. I thought that was so cool because here, we’re conditioned to think that retirement accounts can’t be touched until we’re old with a bunch of gray hair on our rocking chair on our front porch.
We can’t touch the money until then or if we can touch the money earlier than that, we’re going to pay 30% in penalties and taxes to the IRS. That’s not cool. That doesn’t sound fun. What if there was a way to be able to access your own money that you worked for penalty and tax-free? You wanted to use the money to start a business, invest in some real estate, pay off high-interest rate credit card debt or invest in crypto. Doing things beyond buying Tesla stock or mutual funds. We’re pulling back the curtain and teaching people IRS-approved strategies to help people have more control and freedom over their money.
Is your company solely on the education side?
Yeah. We set up the accounts. We do all of the education. We teach people the primary product that we help people called a solo 401(k). We do some self-directed IRAs, but a ton of solo 401(k)s because they’re superior, in my opinion, to an IRA. They have more bells and whistles. The con is they’re not for everyone. What I mean by that is you have to be an entrepreneur with some business activity going on and you have no W-2 employees tied to that business.
You can still be working for another company and have a solo 401(k) only as long as you have some business activity going on without any W-2 employees tied to your business. They’re not for everyone, but for the people that qualify, they are an amazing account. They give you a ton of freedom and tax-free ability. We do all of the education, the setup and then we have a big network of financial companies that we work with to help our customers solve different problems.
You guys are a custodian then as well?
No. We’re the buffer between the custodian and the actual customer. The funny thing about custodians like, “What are custodians?” They suck to put it into clear terms. I’ll tell a story. My uncle, who I never knew had a self-directed retirement account. He watches one of my videos on Facebook. I’m talking about the solo 401(k), how you can take a loan from the plan, penalty and tax-free and then use that money to pay off high-interest rate credit card debt or any other debt.
He sees it in my video and hits me up. He’s like, “Nephew, I have a self-directed IRA. Can I move this into a solo 401(k), take a loan out and use that money however I want?” I’m like, “Yeah.” He’s like, “Can I do it with an IRA?” I said, “No, there’s no loan feature on an IRA, but you can do it with a solo 401(k).” He’s like, “Okay, cool.” He’s like, “My money is held at Provident Trust Group.” It’s a custodian that we work with. Provident Trust Group is a good company. They’ve been around for a long time. They’ve got billions of dollars under their umbrella.
They’re not like some new company that came out last year. I was like, “That’s funny, Uncle, the accounts that we help people set up, we send them to Provident Trust Group to open up their accounts.” He’s like, “What the heck? Why didn’t the custodian teach me about a solo 401(k)?” I’m like, “That’s not their job. Their job is to have the license.” They’re there to hold the money like a bank.
A lot of these custodians are super passive or in the background. They’re holding the money like a bank. They’re not doing a ton of customer service and education. There might be some outliers or custodians out there who do a great job on customer service and education, but for the most part, I see a big void that needs to be filled between the buffer of the customer and the custodial account. We’re not the custodian. We don’t hold the funds, but we do a lot of the customer service or education for the different customers.
I would imagine out of the gate that would have been a tricky space to figure out how you fill that void. It sounds like you guys have figured that out because it is a void. I educated my brother on this. I was like, “Take some of your money and put it into a self-directed account.” He’s like, “What’s that?” He’s like, “Everybody I talk to says this is like some weird voodoo stuff.” I’m like, “No, it was pretty streamlined.” I want to know about the differences between a solo 401(k) and a self-directed IRA because I’m not entirely clear.
The big one is the loan feature. An IRA has no loan feature, in a solo 401(k), there is. The loan feature allows you to take out 50% of the account value or $50,000, whichever number is less. You can use that money however you want. You can use that money to pay off high-interest rate credit card debt. You can use that money to start a business.
Maybe you want to start a food truck business or an online business. You can use that money however you want. However, you do have to pay back the solo 401(k) within five years. As long as you do that, there’s no taxable event. There’s no penalty or taxes on the money you take out. There’s an interest rate on a loan. Usually, it’s about prime plus two. You’re looking at about 5.2%, 5%.
We all have a sad story. It’s just a matter of how are you going to use it. Are you going to use it as motivation to do better in this world, impact more, and win more? Or are you going to use it as an excuse to keep you down?
However, that interest goes back to the retirement account, to the solo 401(k). You’re paying yourself back the principal plus the interest. That’s a big difference between the solo 401(k) and the IRA. Another one is the contribution limits. It’s like a traditional self-directed IRA. You can contribute $6,000 per year if you’re under 50 years old. If you’re over 50, you can contribute $7,000 per year of new money. Whereas a solo 401(k), depending on how much money your business brings in, you can contribute up to $58,000 per year if you’re under 50 and then 64,000 a year if you’re over 50.
What I love about those high contribution limits is you can contribute that money to the Roth portion of a solo 401(k). That comes in handy. If you’re reading this now, and you’re making multiple six figures a year, there’s a good chance that you’re not able to contribute money directly into a Roth IRA. The IRS says you make too much money. Whereas a Roth solo 401(k), it doesn’t matter. You could be making $1 million a year. You can still contribute to a Roth solo 401(k). Imagine sticking $50,000 a year into a Roth solo 401(k). Maybe for whatever reason, you didn’t stick a lot of money into retirement accounts in your early years. You’re getting a little older and need to catch up.
This is a great way to stick a good chunk of money every year and you’re paying taxes on the seed, but the harvest is tax-free because it’s Roth. It’s growing tax-free. You can invest your money wherever you’d like, crypto, precious metals, private lending, private equity and a lot of different options beyond what the stock market offers.
I can’t even begin to understand why those different programs are out there or the nuance of each of them. It gets a little confusing. That is interesting that you can put $50,000, but it has to be in a company that has no employees.
This works out for people like real estate agents. Maybe you’re a real estate agent now and make a good chunk of money every year, 1099. You’re probably set it up as a sole proprietorship or an LLC. If you structure it right and “your business” makes enough money where you can pay yourself, you can take the income that you pay yourself, and you can take the chunk of that and shove it into a solo 401(k).
If you’re maybe a dentist or a freelancer, if you get 199 income and there are no W-2 employees, there can be 1099 contractors. My team was talking to someone who had a business that was killing it and their manpower was 1099 contractors. It wasn’t W-2 employees. If it’s 1099, that works. Online businesses, consultants, freelancers or different types of people out there who have some business activity going on that don’t have a traditional W-2 employee set up.
Let’s shift gears a little bit and circle back to where we began this conversation. What do you think are some of the strategies you’ve employed to win the hand that you’ve been dealt?
It started again when we were younger. When my parents got divorced, my dad abruptly left for Mexico without giving me any answers. I remember one day he was like, “I’m going to go and drop your grandma off in Mexico. I’ll be back. I’ll see you soon.” I never saw him again. I’ve since moved on. We’re cool now. He still lives there. I forgave him. You don’t want to hold on to grudges. That’s another lesson. It doesn’t serve anybody if you hold on to resentment. Everyone has their own time to heal. Grudges aren’t going to serve anybody.
Going back to your question and the reason I bring up my mom is that my mom was working full time and wasn’t getting any help from my dad, who moved. She’s on her own taking care of a rebellious pimple pop-in, puberty going through 12, 13-year-old dude. We all know that it’s hard. I never once saw my mom complained. I never once saw her cry or get mad. She never talked bad about my dad. She kept trucking and working every single day. She never called in sick. She showed up and that set the tone. I don’t even know what this was at this time, but a victim’s mentality.
If you’re reading this, you know someone in your circle or your family or friends who are always complaining. It’s always someone else’s fault. They don’t take responsibility. “Poor me, why me? This sucks,” and it’s so toxic. You’re being a victim. Take ownership, responsibility and do something about it. The world keeps spinning. That set the tone for me. As I was telling you, I went through a lot of adversity. A lot of it was self-inflicted.
No one made me get addicted to OxyContin or have a kid at 18, 19 years old. Those were choices. We’re a product of our choices, but you do have to get to a point where it’s like, “That’s on me and I need to do better.” I need to take ownership. That’s been crucial for me. As you and the readers know, if you’re running a business, everything falls on you. It’s all on you. The buck stops with you.
Not taking the victim mentality is not a popular topic these days. Being a victim either serves you or the people that you claim have done you wrong.
We all have a sad story. I’m not special. It’s not like I went through these hardships that no one else has gone through. There are people who have done way better than me and are winning way more in life than me that went through harder stuff than me. We’re not special. We all have a sad story. It’s a matter of how you are going to use that sad story. You’re going to use it as motivation, a turning point to do better in this world and impact more and win more or are you going to use it as an excuse to keep you down?
Daniel, thank you for taking the time to share your backstory, the lessons you’ve learned, both the easy and the hard ways. Sharing stories of what it takes to launch a business and the growing pains found inside of that. I’ve got four questions for you. The same questions I ask everybody who comes on the show. They are real estate-related questions. The first question is this. If I gave you $20,000 to invest in real estate with no previous real estate investing experience, what would you do with it and why?
I probably would invest in a real estate mastermind. I’ve invested a lot of money in masterminds and going back to the relationships, to me, it’s the most valuable resources that are out there. It’s more valuable than Bitcoin or any resource out there. Relationship is a currency. To me, it’s the most valuable currency. I would pay to get in a room full of a bunch of high-level people that are making moves, deals happen. As long as I can bring value to that room and do the work, I’m going to make that money back.
If you could help our readers avoid one mistake in real estate, what would it be? How would you avoid it?
What’s your exit strategy? How long are you going to hold this asset? I told you this story about when I bought my property in 2008. I bought it at the high point. I was nineteen years old, making a bunch of money. I’m like, “I’m making $2,000, $3,000 a week. Let’s buy a house. That sounds cool.” I have no plan of, “I’m buying at a high point in the market, but I’m going to hold onto this asset for ten years. I don’t care if the market takes a crap. What I care about is, on paper, the gain or losses it realized. I’m not selling.” I didn’t think this through. Know what’s your exit strategy and your time horizon. If you’re going to hold onto an asset, whether it’s crypto stocks, real estate, precious metals, if you know how long you’re going to be in and out of that asset, who cares if there’s some turbulence along the way.
When it comes to investing in the world, what’s one thing you’re doing right now to make the world a better place?
I’m focusing on my ecosystem, my team and my employees. I’ve got thirteen of them. I want them to be better, wiser, smarter, make more money and be happier. The better your employees are, the happier they are, the better work they’re going to do for customers. As a business, your reputation, your name, your customer experience is everything. You can only go so far as a solopreneur. Eventually, you need to delegate, hire, have managers, teams and an awesome culture. I’m focused on growing this business, empowering my team, and seeing them level up so I can keep growing this thing.
Daniel, if our readers want to get in touch with you, what is the best way to do that?
It’s at DanielBlue.me. That website has all information about me. It’s got a link to my podcast, How Winners Win. It’s got a link to my book. My book came out and hit bestseller on Amazon. It’s called Blueprint to Your Best Retirement. It’s a lot of what we talked about, the solo 401(k) and self-directed. I wrote a book that’s super short, straightforward, simple and easy to the point. I didn’t use a lot of hard-to-understand lingo. I wanted to dumb it down and make it nice and simple for anyone to pick it up and be able to take away some tactical and actionable information. The website has got links to all my social media handles as well.
Daniel, thank you so much for your time.
Thanks, Sam.
Important Links:
- Quest Education
- DanielBlue.me
- How Winners Win – Spotify
- Blueprint to Your Best Retirement
- Daniel Blue – LinkedIn
About Daniel Blue
Daniel Blue helps business owners get creative with self-directed retirement accounts. There are a lot people who are not aware they can access money in their IRA / 401k’s without paying the penalties and be able to use that money as working capital for a business, pay off debt and have control of how their money is put to work.
It is Quest Education’s mission to shed light on the power of self-directed retirement accounts and how this vehicle can be used to create wealth.
