• Save
Be Rich : The Ten Financial Laws of Prosperity
Upcoming SlideShare
Loading in...5
×
 

Be Rich : The Ten Financial Laws of Prosperity

on

  • 410 views

บัญญัติ 10 ประการ ที่จะนำไปสู่ 'ความมั่งคั่ง' (1) ...

บัญญัติ 10 ประการ ที่จะนำไปสู่ 'ความมั่งคั่ง' (1)
Read more: http://goo.gl/R68NEc #WKC

Be Rich : The Ten Financial Laws of Prosperity
By Dan Dulin and Greg N. Weiler II

Statistics

Views

Total Views
410
Views on SlideShare
346
Embed Views
64

Actions

Likes
2
Downloads
0
Comments
0

3 Embeds 64

http://www.wiseknow.com 56
http://old.wiseknow.com 5
http://wiseknow.com 3

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Be Rich : The Ten Financial Laws of Prosperity Be Rich : The Ten Financial Laws of Prosperity Document Transcript

  • Share this book! 1) Print out as many copies as you like (yes, it’s 200 pages). 2) Email this PDF to your friends. –or– 3) Post this PDF on your website, facebook, and BLOG. –or– 4) Email a link to the PDF download www.BeRichBook.com Experience this book differently. (3 Hours, 48 Minutes) Download the AUDIO BOOK from www.BeRichBook.com BE RICH The Ten Financial Laws of Prosperity That Determine if You Are Rich, Poor, or Somewhere In Between. By Dan Dulin and Greg N. Weiler II ________________________________________________
  • 3 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Copyright 2012 Santa Maria Group, LLC. All rights reserved. This abridged version of Be Rich: The Ten Financial Laws of Prosperity was intended to be shared for non-commercial use only. You have our permission to email, print, post this file online, and share it with others free-of-charge, provided you make NO changes to its original digital file format or edits and modifications to its contents. All commercial uses of this material including, but not limited to: binding and selling it as a book, or eBook, or audio book, are strictly reserved. The Ten Financial Laws of Prosperity™, TaxiLoco™, and BRAIN-work™ are trademarks of Santa Maria Group, LLC. Disclaimer, legal notice, and all-around don’t blame us statement. We live in a litigious society and some people like to point the hairy finger of blame for their poor choices at everyone but themselves. Therefore, you get our standard disclaimer spiel with a twist. This book is for educational purposes only. Read it, laugh, cry and enjoy yourself. We make no guarantees that the information contained herein will actually be able to help you. Because, let’s face it, you might be happy with the way your life is right now or don’t want to do the real work it takes to make lasting changes. Before attempting any technique or following recommendations, ideas, instructions, rules, processes or any other bright idea in this book, make sure you consult with a professional accountant, tax advisor, financial advisor, insurance advisor, real estate advisor, and attorney. All of the stories in this book, along with the people portrayed in them, are fictional, except for the stories that the authors tell about themselves. Any character that resembles a real person, living or dead, or anything resembling a real event are pure coincidence. Phew! Vs 10/08/2012
  • 5 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Special Thanks Cover Design: Ms. Roberta Schultz Buenos Aires, Brazil http://robertaschultz.daportfolio.com/ Consulting: Mr. Paul Sammis Phoenix, Arizona The hours we spent in economic debate, discussions over world events, and your friendship are missed. Rest in peace. Mr. Gregory N. Weiler San Juan Capistrano, California
  • 7 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << To David and Dain, I was told, “All roads lead to Rome,” but I have learned that some circle the mountain a few times before getting there. Have the courage to face your personal challenges, be quick to correct your mistakes, and never take yourself so seriously that you cannot laugh at your follies. This book holds the key to a lifetime of financial abundance and the secret to true wealth. Use this knowledge to take action with an unwavering belief that you can accomplish your goals, and a magical transformation will occur. You will be part of a small minority of people that can proudly say, “I achieve.” With love, Dad
  • 9 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Table of Contents BE RICH, NOT POOR 13 CHAPTER 1: THE SECRET INGREDIENTS 19 The First Financial Law of Prosperity............................................................................ 21 Twelve Questions for the Gold........................................................................................... 22 The Secret Ingredients.......................................................................................................... 24 What You Think is What You Get..................................................................................... 26 What Does Money Mean to You? ...................................................................................... 28 Positive Thinking and “Luck”............................................................................................ 30 How Much Money Do You Want?...................................................................................... 32 The Plan....................................................................................................................................... 34 CHAPTER 2: THE FIRST FINANCIAL LESSON 39 The Second Financial Law of Prosperity....................................................................... 40 Anyone Can Do It, but Few Will Try................................................................................ 41 Modern Slavery......................................................................................................................... 43 CHAPTER 3: MAKE MORE MONEY 48 The Third Financial Law of Prosperity........................................................................... 52 Get Into the Fast Lane .......................................................................................................... 54 Time Is A Limited Resource................................................................................................ 55 Knowledge That’s Richly Rewarded................................................................................ 56 Two Ways to Make Money.................................................................................................... 58 The BRAIN-work Challenge ................................................................................................. 60 CHAPTER 4: GREED IS A MONSTER WITHIN 63 The Fourth Financial Law of Prosperity........................................................................ 65 The Lifestyle Trap and Human Need............................................................................... 67 The Lifestyle Fence ................................................................................................................ 70 The True Cost of Ownership............................................................................................... 72 CHAPTER 5: YOUR THREE GIFTS 75 The Fifth Financial Law of Prosperity............................................................................ 78 Your Three Gifts....................................................................................................................... 80 A Random Act of Kindness.................................................................................................. 82 The World Needs More Heroes ........................................................................................... 83 CHAPTER 6: A TWIST OF FATE 86 The Sixth Financial Law of Prosperity........................................................................... 90 Your Emergency Fund........................................................................................................... 91 Avoid Major Loss with Insurance ..................................................................................... 92 When You are Dead or Mentally Gone............................................................................ 95 When Disaster Strikes ........................................................................................................... 96 CHAPTER 7: FINANCIAL SLAVERY 100
  • The Seventh Financial Law of Prosperity ................................................................... 103 Start Living Debt Free ......................................................................................................... 104 Credit In Our Society Is Like Heroin To a Junkie .................................................. 105 Another Way to Look at Debt........................................................................................... 108 Negotiate Your Debt.............................................................................................................. 109 How To Eliminate Your Debts.......................................................................................... 109 CHAPTER 8: THE ART OF MAKING MONEY 113 The Eighth Financial Law of Prosperity ...................................................................... 114 Inflation- The Hidden Tax.................................................................................................. 117 Two Mules Teach the Art of Making Money............................................................... 118 The Miracle of Compounding ........................................................................................... 120 The Golden Rules of Investing......................................................................................... 121 CHAPTER 9: PROTECT YOUR MONEY 127 The Ninth Financial Law of Prosperity ........................................................................ 132 Base Hits.................................................................................................................................... 133 The Paradox of Modern Money ........................................................................................ 136 Business Cycle Risks and Currency Manipulation.................................................. 139 The Golden Rules of Protection ...................................................................................... 143 Chapter 10: HOME SWEET HOME 149 The Tenth Financial Law of Prosperity........................................................................ 152 “Intelligently” Pay Off a Home Loan............................................................................. 154 Think Correctly About Home Ownership.................................................................... 159 Turn Your Home into an “Investment” ....................................................................... 160 ADDITIONAL RESOURCES FOR YOU 165 BONUS Chapter: Making Millions in Real Estate 167 The Keys to Successful Real Estate Investment ..................................................... 168 Eight Ways to Invest in the Same Property............................................................... 168 2013-2020 Forecast: The Decade of Economic Decline....................................... 168 ACKNOWLEDGEMENTS & RECOMMENDED READING 173 ABOUT THE AUTHORS 177
  • 11 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com <<
  • 13 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << BE RICH, NOT POOR The world is forever the same yet always changing. Forge and bend it to your vision and you will find the stuff that makes dreams come true. Today we celebrate your financial awakening. It starts the moment you believe you can be rich and want to do something about it. Consider your awakening a fork in the road. Down one road you will find a lifetime of financial independence, while the other leads to a life of financial struggle and despair. When you choose the road to financial independence, you take the route less travelled. You will quickly separate yourself from the majority in this world who are precariously close to financial ruin. Whether you are rich, poor, or somewhere in between, the choice has always been up to you. Awaken and enjoy a lifetime of financial independence. Poverty weighs heavily on the human spirit. It robs you of your peace of mind, limits your personal freedoms, and subjects you to one of the oldest forms of discrimination—the discrimination against another based on their ability to pay. Nonetheless, poverty is a choice. If you choose to believe you will be poor, you have condemned yourself to poverty. If, however, you choose to believe you will be rich, a world of opportunity is open to you. There are two financial classes of people in this world: those who are financially independent and those who are not. If you can quit your job, leave a business, give up any outside financial assistance, and do almost nothing all day without having to worry about maintaining your current lifestyle, then you are
  • financially independent to your standards. If you can’t, then you have some work to do. Your ticket to ride the “Money Train” is in this book. You will learn The Ten Financial Laws of Prosperity, the Art of Making Money, the Golden Rules, and how to get started. By mastering the Laws, following the Rules, developing an intelligent plan, and taking purposeful action, you can expect riches that exceed your wildest dreams. If you are a little less committed to action but follow this system, The Ten Financial Laws of Prosperity will still produce profound positive financial results in your life. If, however, you are content working for others, mistakenly believe that someone else will take care of you when you are old or sick, and cling to a belief that riches are far beyond your grasp, then this book will look good collecting dust on your nightstand. Imagine what your life would be like if you didn’t have to worry about money. You could buy whatever you desire, retire at any time, travel anywhere, and spend your days as you please. You could help the less fortunate, give to family and friends, and be financially happy. This could be your future. The missing pieces to your money puzzle and the answer to the question, “How can I get rich and STAY rich?” are in this book. This book is for anyone interested in becoming financially independent and preserving wealth for life. Financial independence is the stage in life where your money grows on its own and covers all of your lifestyle costs. It means you are your own boss and agonizing over money is now optional (yes, for some people, all the money in the world still isn’t enough). Only by following The Ten Financial Laws of Prosperity can you hope to accumulate and retain vast sums of money. They are the rules to the “get rich, stay rich” game. Complete mastery of the principles in this book will decrease the amount of time it takes to get rich. Ignorance will make a lifetime of financial independence impossible. The Financial Laws of Prosperity can be bent but never broken, because they are as inescapable as the passage of time. It doesn’t matter who you are or what you
  • 15 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << currently have. You will never experience a lifetime of financial independence and true wealth without adhering to these Laws. Financial independence is a lifestyle. Proclaiming yourself “rich” one day, and proceeding to ignore The Ten Financial Laws of Prosperity will quickly drive you to the poorhouse just as surely as gambling away all of your money at a Las Vegas casino. To get rich and stay rich, you must constantly prove yourself to be a good steward of money. There’s a huge difference between having money at one point in your life and achieving a lifetime of financial independence. Therefore, the achievement award for financial independence only gets handed out after your death. Die rich and you get the award—die poor and your funeral costs will be one more burden you pass along to the ones you leave behind! Poverty is both a mentality and a lifestyle. If you think poor, you will act poor. This is evident with people who suddenly get a large amount of money (lottery winners, inheritance, legal settlements, etc.), only to have it rapidly disappear out of their lives. These people spend their money in such an unsustainable fashion that they have nothing to show for it in a short period of time. They identify with being poor and then act poor on a grand scale. As a general rule, poor people spend all of their money; this, of course, is what makes them poor. If you want to know real financial heartache, make a lot of money and then lose it all. If you happen to make it back, you will never stray too far from The Ten Financial Laws of Prosperity again. We are all at different points in our financial journeys, but subject to the same Ten Financial Laws. Countless athletes, actors, singers, business people, entrepreneurs, lottery winners, recipients of large inheritances, and others have skyrocketed to the top of the world’s financial Who’s Who list only to go broke and then disappear into the shadows of history. Despite what pop culture teaches, there are NO shortcuts to becoming and staying rich. You must master
  • The Ten Financial Laws of Prosperity before you can enjoy a lifetime of financial independence. During your financial journey, you will always find someone richer than you. This has nothing to do with fairness, trust funds, or a lucky roll of the cosmic dice. What they have is theirs for a reason, and that reason may not be apparent to you. What you think about people with true riches will determine your own financial success, because your thoughts reveal your personal beliefs about money. Negative beliefs will prevent you from becoming rich just as surely as spending your days at home “flopped” on the sofa, watching television, surfing the Internet, and playing video games. Many people spend years wanting to be rich and wonder why they can’t reach this goal. They work hard for others and are disappointed when the rewards they receive don’t measure up to their expectations. These people have yet to realize that as long as they answer to somebody, they will never make the money they truly deserve. The trick to making a lot of money is to become self- reliant. Only then can you break the chains of financial limitation imposed on you by others. Having an abundance of money is not true wealth or a measure of your total happiness. To have true wealth in your life is to be rich in thought, friendship, love, joy, spirituality, compassion, gratitude, and generosity. It has absolutely nothing to do with the material possessions acquired with money. A life with an abundance of money and lacking in sincere, fulfilling connections to other people is a life saturated with loneliness and despair. The Fifth Financial Law of Prosperity will teach you to Help Those in Need, but true wealth dwells in and must come from your heart. No cause is greater and no deeds more worthy than helping the needy. It is these selfless acts that define our own humanity and add purpose to our lives. For many, this simple and rewarding concept will take years to understand and longer still to act on, even though it’s an essential component to the attainment of complete and total happiness.
  • 17 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Everyone’s financial story is worth telling. This book tells the stories of people who have struggled to reach financial independence and connects those stories to the principles contained within these chapters. The people in these stories are fictional, but the lessons imparted are timeless because they speak to circumstances anyone could encounter in life. I am no better than you and have made my fair share of mistakes. I’ve squandered money, been caught up in the “lifestyle trap,” taken foolish risks, made bad decisions and, on occasion, had to worry about where my next meal would come from. It took two major financial setbacks before I was willing to change my whole approach to financial independence. Each setback was painful. I collected debt and financial obligations that only added stress to my life, sent my personal relationships into turmoil, and dragged me further from my financial goals. But I embraced these setbacks and learned from them. Within each, I found seeds of opportunity, seeds that eventually grew into the idea for this book and provided me with the inspiration to create new businesses. What causes some people to become sustainably rich while the vast majority of society continues to struggle financially? The answers are not so obvious, and even the rich can’t completely explain it. The purpose of this book is to bridge that gap in knowledge and eliminate the guesswork. By the time you finish reading, you will be able to answer this question and, more importantly, do something about it in your own financial life. At the end of this book, I have included a bonus chapter (paperback edition and Kindle version only) on real estate investing titled: Making Millions in Real Estate. This bonus section contains a number of techniques that real estate investors use every single day to make money. Reading this section will not immediately turn you into an expert real estate investor, because expertise in anything comes from time, experience, and knowledge. Its purpose is to plant
  • the seed that anyone can invest in real estate and show you how it’s done. Where you go from there is up to you. There is no exclusivity on who gets to be rich. It all boils down to your beliefs and your ability to execute a meaningful plan. Anyone can do it, but few will try. Make the choice to incorporate The Ten Financial Laws of Prosperity into your life and reap their rewards. Riddle: In this world of mice and men, do you see the Lion? (Would you like a hint? Look in the mirror.)
  • 19 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << CHAPTER 1: THE SECRET INGREDIENTS Believe you can and discover a world of unlimited possibilities; believe you can’t and forever find none. Jerry had been living on the streets of New York City for several months. He was a tall, likable man in his mid-30s with dark hair and a deep tan. He was an Iraq War veteran who bounced from one low-paying job to the next. Jerry was no stranger to hardship, but tonight he was in the wrong place at the wrong time. Two men had just run past him as he turned the corner onto an otherwise deserted street when, suddenly, a snarling German Shepherd leapt toward his face. Instinctively, he raised his arm to protect himself. The police dog latched onto Jerry, dragging him to the ground. Sharp teeth ripped into his arm, sending pain throughout his body. “Stop struggling!” the police officer shouted at him. He then turned to the dog. “Release!” Jerry went limp as the dog let go of him. The officer leashed the animal and radioed headquarters for Jerry to be rushed to the hospital. Officer O’Malley found Jerry wandering the streets a few days later. He had read the hospital report and learned that the man his dog had mistakenly attacked was homeless and between jobs. He felt compelled to help and made arrangements for Jerry to stay at a local group home.
  • Living at the group home was hard for Jerry. He no longer slept on the streets, but he had little privacy. He got a job as a taxi driver and started to spend his spare time at the public library where he found solitude. The library changed Jerry. He developed a thirst for knowledge and a love for reading. Books helped him realize there was more to life and that he deserved better. He began to believe in himself and made enough money from his job to move into a small apartment. Jerry got into the habit of saving a little from each paycheck, but it was hard to make ends meet. He grew tired of struggling financially and made the conscious decision to become rich. He didn’t know how he would create his fortune but he knew the answer was out there. He took advantage of his job as a taxi driver to interview business people he picked up as riders. He gathered their thoughts on success and talked to each of them at length about how they made money. At the library and on the Internet, he would diligently research any new idea and moneymaking concept that interested him. Time passed and Jerry began to notice that more of his passengers were using smartphones. People raved about these gadgets. Jerry recognized the start of a new trend and was determined to capitalize on the opportunity. He created a list of different ways to make money from smartphones. A few of these ideas turned into complete failures. Undeterred, he continued his search for a moneymaker. Jerry’s golden idea came to him after a near-miss accident with a bicyclist. A biker swerved into oncoming traffic and Jerry nearly hit him. It was a seed of inspiration. He went home that night and sketched out an idea for a smartphone game he called “TaxiLoco.”
  • 21 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Jerry spent the next few months refining the idea for TaxiLoco He hired a programmer and graphic design artist using an outsourcing website, and soon his game was ready. He posted a simple sign in the back of his taxi to market it. The sign sparked the curiosity of a passenger who identified himself as a freelance reporter. The reporter talked to Jerry about the development process for his game. Jerry didn’t give the conversation a second thought; it was only one out of an entire day of conversations he had with riders. But one week later, Jerry’s game, TaxiLoco, was featured in an article in a prominent national newspaper about emerging smartphone opportunities. Before he knew it, his game went viral and Jerry became a very rich man, selling millions of copies. The First Financial Law of Prosperity The First Financial Law of Prosperity is You Must Believe. Only when you truly believe that you can create financial abundance in your life will you intelligently develop and follow a plan to produce the desired wealth. Belief comes before money. The single most important thing needed to create financial abundance is unwavering belief. Think you can do something and there is room for doubt; know you can do something and harness the limitless creative power of your mind to make it a reality. In practice, the exact formula to be rich is 80% belief and 20% everything else. This means that once you truly know you will be rich, you’ve taken the single most important step toward achieving your goal. Belief is the foundation for creating a lifetime of financial independence. Summary of the Ten Financial Laws
  • Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. Twelve Questions for the Gold In this book, there is a series of twelve questions that I ask you to write the answers to. I know that many readers won’t bother answering the questions, will dismissively breeze through this book, and then wonder why their money situation never improves. So why not go for the gold and answer the twelve questions? The questions are easy. They are designed to help you clarify your thinking about what you really want financially. How can you achieve a goal if you don’t know what the goal is? Simply saying, “I want to be rich” or “I want more money,” and then doing nothing to change your financial situation doesn’t make any sense. Look around. Billions of people take this exact approach. Invest the time to answer the twelve questions. They will help you clarify your financial goals and get you started down the path to complete financial independence.
  • 23 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Why Rich, Not Poor? Why do you want to be rich? The answer to this question will reveal your true motivation to be rich. Some reasons are more motivating than others. Fill in your answer: “I want to be rich because __________.” Does your answer inspire you or is it just a bunch of words? Answers to this question will vary, but having material possessions, stacks of cash, or being able to afford luxuries aren’t the real reasons why you want to be rich. Once your basic needs for survival—food, shelter, clothing—have been met, what you are truly searching for is a feeling or a satisfaction of human need that you think money will give you. In Chapter Four, we will discuss the human needs for safety, love and belonging, to be valued, and to find purpose in life. With a little reflection, you’ll find your reason for wanting to be rich. You must have a compelling enough reason why you want to be rich if you are going to have the proper drive to be rich. Your motivation to be rich is fueled by your desire, or want, for this outcome. Do you have enough “fuel,” or desire, to motivate you past any obstacle to become rich? Time will tell. If you think money will solve all of your problems, you are going to be disappointed. Money is only a catalyst for obtaining your material desires. It can’t eliminate all of your problems and make you truly happy. Your problems are the challenges of life that push you to be better and make you grow as a person, and you cannot truly be alive without them. Everyone thinks that money will make them happy, but happiness is a feeling that comes from within and has nothing to do with the size of your wallet. That being said, there’s
  • nothing wrong with getting rich first and mulling over the finer points of philosophy later! The Secret Ingredients You may have heard about the paradox of belief—whether you think you can or can’t do something, you are right. Any reason you can invent or person you can blame for not having financial abundance in your life is just a convenient excuse. Excuses hold you back from getting what you want. Cast them aside to open a world of opportunity. Your beliefs are the only real obstacle to becoming rich and, more importantly, staying rich. “Why am I not rich?” Ask yourself this question, and if you want to be an overachiever, write down the answer(s) to uncover the reasons holding you back. Review your answer(s) to determine if:  You blame others or certain circumstances for your financial situation,  You feel as if you are lacking in some quality, trait, experience, or resource. You may have some great reasons on your list, but do you really want to sacrifice your financial independence for a handful of excuses? Rip up the list, crinkle it into a little paper ball, and take the three-point shot with it into the trash. Get all of that nonsense out of your head because it’s the wrong way to think. Belief in yourself and an unyielding determination to achieve a desired result are the only resources you need to be rich. They are the secret ingredients
  • 25 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << needed in the recipe to be rich and you already have them locked away inside of you! Everything else stems from these two components. Belief comes before money; so don’t worry about how to create your financial independence. Know that you will create your financial independence. Begin by developing the unwavering belief that you will be rich and can achieve your financial independence by working at this goal every day. When you believe in something so strongly, you know with every fiber of your being that it will be true—the object of your belief will appear in your life. This does not occur by magic or trickery. You will make it happen. It is only through consistent and cumulative daily action that larger goals can be achieved. Believe you can and you will—believe you can’t and you won’t. Man often becomes what he believes himself to be. If I keep on saying to myself that I cannot do a certain thing, it is possible that I may end by really becoming incapable of doing it. On the contrary, if I shall have the belief that I can do it, I shall surely acquire the capacity to do it, even if I may not have it at the beginning; … —Mahatma Gandhi (1869-1948)
  • What You Think is What You Get You are directly responsible for what you have in life. It is your very thoughts that determine if you are rich, poor, or somewhere in between—just as surely as they determined what time you got out of bed this morning. Your thoughts are the foundation for your beliefs and a governor over the action you will take to accomplish a goal. A belief is what you think to be true. It’s a collection of thoughts that help you rapidly interpret and evaluate the world around you based on your experiences. Beliefs can give instantaneous meaning to circumstances and events and are designed to help you survive and prosper in your environment. Everything you do in life originates from the process of thinking. This is important because your thoughts motivate you and determine the actions you will take to accomplish a goal. If you believe you can do something, you are more likely to do it. The results or experiences generated from your actions create more thoughts as feedback. This feedback can positively or negatively reinforce your original belief. Let’s say, for example, that you have a belief that it’s GOOD to take the bus to work. You take action and ride the bus. However, you get an undesirable result because the bus was slow and made you twenty minutes late. Based on this feedback, or new thought, your original belief about taking the bus to work has been altered. You now believe taking the bus to work is BAD, because it will make you late. This new distinction will affect all future decisions about taking the bus to work. This continuous process of thought to belief, belief to action, action to result, and finally back to thought is called the “Thought-to-Result Cycle.”
  • 27 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Your brain is the perfect cause-and-effect feedback loop, much like audio feedback from a speaker that gets louder and louder when an open microphone is placed too close to it. Your dominant thoughts reverberate, get more intense, and cause you to take appropriate action, even if this action is to do nothing. To have an abundance of anything in your life, you must have the “right” dominant thoughts looping in your brain because your thoughts motivate you. Once your thoughts are aligned with your desired goals, they will compel you to act accordingly. Your dominant thoughts manifest themselves in your life for good and bad. For instance, poverty thoughts produce poverty, hopeless thoughts produce hopelessness, happy thoughts produce happiness, greedy thoughts produce greediness, and loving thoughts produce love. The current state of your life is a direct reflection of your dominant pattern of thinking, even if you are not consciously aware of it—because there is both a conscious and subconscious level to thought. To effectively change anything in your life, you must first start by correcting your own thinking. The very process of thinking affects your motivation. Your dominant thoughts shape your beliefs and govern the amount of action you will take to achieve a
  • desired result. The stronger your belief, the greater amount of time and effort you will expend to achieve that result. Everything you do and have in life is a direct reflection of your dominant pattern of thinking. The only real enemy or ally to your success is your own thinking; learn to control your thoughts or your thoughts will control you. Sow a thought and you reap an action; sow an act and you reap a habit; sow a habit and you reap a character; sow a character and you reap a destiny. —Ralph Waldo Emerson (1803-1882) What Does Money Mean to You? You decide to meet a friend for lunch, and, on the way to the local restaurant, you notice a magnificent mansion surrounded by acres of meticulously manicured grounds. As you pass, you see the groundskeeper finishing his work under the warm summer sun and several expensive cars parked in the driveway. Posted on the ornately decorated gate is a sign—“Now Hiring: Cook, Maid, Chauffer.” You recognize that an extremely rich person lives at the mansion, and it doesn’t take you long to start speculating about them. STOP! Take a few moments to consider some traits, characteristics, and the personality of the mansion’s owner. What do you think about the amount of money it would take to own a house like this? What do you think about the type
  • 29 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << of help the mansion’s owner is seeking? Do you think this rich homeowner is a good or bad person? If you had the money, would you live in a house like this? Why or why not? GO! You continue on your way and meet your friend for lunch. During the meal you tell her about the beautiful mansion. Before you can finish the story, your friend excitedly interrupts you and explains she’s met the mansion’s owner. She tells you the owner:  Contributes large sums of money to help the less fortunate buy food, get job training and obtain affordable housing  Is the benefactor of several orphanages that have a wonderful reputation for finding homes for displaced children  Volunteers at a local animal shelter, nursing abused cats and dogs back to health Helped his former cook, maid, and chauffer start their own successful businesses What would you say about the mansion’s owner now? How many negative thoughts did you originally have of the owner? Do you believe you deserve to live in a beautiful house and have lots of money? If you don’t think you are worthy, take a few moments to consider the reasons why. Could these reasons potentially hold you back from achieving your financial dreams?
  • This story was designed to probe your beliefs about money. Having money doesn’t automatically make you a good or bad person. Money doesn’t create a person’s character—it only helps to reveal it. Money is an accelerator of your ability to fulfill your material desires and cannot be categorized as “good” or “bad”. The way you think about money is important. Negative thoughts about money will influence the amount of action you are willing to take to achieve your financial independence. The only real enemy or ally to your financial success is your own thinking. Your thoughts must be controlled. It is only through honest, careful, and objective self-examination that you can reveal your negative thinking about money. To effectively change anything in your life, you must first start by correcting the way you think about it. Once your money thoughts are congruent with your financial desires, your thinking will motivate and drive you to reach your financial goals. Positive Thinking and “Luck” Some people believe that desire and positive thinking alone can bring financial abundance into your life. If this were true, we would all be rich and happy. But greatness can only be achieved through significant effort. Desire and positive thinking alone can do little to change your finances without the employment of purposeful action. Thought, desire, and action are part of a larger system that you will use to create a lifetime of financial independence. Your thoughts are a relatively weak form of energy compared to the measurable force used to create work. The physical act of moving a coffee cup across a table, rather than just thinking about moving it, illustrates how directed
  • 31 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << thought can combine with purposeful action to create a meaningful result. If you had a belief that you couldn’t move the cup because you thought it was glued to the table, you might never have attempted to move it. This is a testament to the power a belief has over your decision to take action. Not all of your actions will yield intended results. Some actions create totally random or unexpected circumstances, which can produce the phenomenon known as opportunity or “luck.” There is a direct correlation between the amount of purposeful action you take and the amount of opportunity or luck you experience in life. The benefits that opportunity or luck may bring you can’t be calculated early in your journey to financial independence. However, these benefits will have a significant positive impact on your ability to achieve your goals. For instance, let’s say you have a great idea for a new whiz-bang product, but you have no idea where to get the money you need to bring the product to market. You decide to go to an entrepreneurial workshop given by local business professionals. While at the workshop, you meet a businesswoman who is excited about your idea and offers to bring your product to market. You never would have met this woman if you had skipped the workshop, and you would have missed this opportunity or lucky chance to bring your product to market. It’s important to emphasize that opportunity or luck only occurs when you act. This is why it’s critically important to take purposeful action. Desire and positive thinking can do little to help you accomplish your goals without the use of purposeful action. Directed thought and action combine to create measurable results. Some of these results create totally unexpected opportunities, or lucky events, which can have a significant, positive impact on your financial life. It’s important to remember that opportunity, or luck, and measurable results can only happen when you take action.
  • Greatness can only be achieved through significant effort. How Much Money Do You Want? If you were to ask the average person on the street what it would take for them to be rich, they might respond with a “lump sum” dollar amount they think makes a person rich. One million. Five million. Ten million. Whatever. The average person doesn’t think too much about what it takes to be rich for life, or about the need for a steady income to continue paying for their lifestyle expenses. All money gets spent over time; income is a steady inflow of cash while lump sums are received once. A lump sum financial goal is a very important part of becoming financially independent, but it should be a calculated number based off of the income you need to support your lifestyle and not a random guess. A financial goal gives you a money target, provides clarity, and keeps you focused. Your ultimate goal should be to obtain a lifetime of financial independence. Complete financial independence means that you receive enough income to maintain your standard of living, and provide for your future financial needs without having to work for your money ever again. Most people work for their money, trading their limited time for an income. But to be rich, money must “work” for you by producing the income needed to support your lifestyle without the sacrifice of your valuable time. What amount of money do you need working for you to support your desired lifestyle? Everyone has different financial needs. Without clearly defining what your needs are, financial independence can be an elusive goal. Grab a pen and define your long-term financial goal by completing these simple steps:
  • 33 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Step 1: How much money do you need to receive, on a yearly basis, to achieve complete financial independence? I need $____________ per year. Step 2: Divide the answer in Step 1 by a conservative interest rate. This is the minimum rate of return you anticipate to receive on your money and can be anywhere from 2% to 25%, depending on your risk tolerance. I prefer to use 10% for this calculation, because it’s an easy number to work with and a decent rate of return. The answer from Step 1, $____________, divided by the conservative interest rate expressed as a decimal ______ (10% = 0.10), equals your long-term financial goal amount of $___________________. For example, divide $500,000 in income per year by 0.10, and you get a $5,000,000 financial goal. PASSIVE INCOME ÷ INTEREST RATE = YOUR FINANCIAL GOAL Step 3: How much time will you give yourself to reach your long-term goal and amass the money needed in Step 2? _________ years. Step 4: What will you do in order to receive some of the money you need to contribute toward your long-term financial goal? Maybe you will be a great doctor, entrepreneur, lawyer, teacher, police officer, engineer, fire fighter, inventor, real estate investor, salesperson, yoga instructor, bartender, or insurance agent. Maybe you will create and manufacture something brilliant. Your possibilities are endless, but you must choose something to focus on that will produce some sort of income to get you started. If you are already doing something, that’s fantastic. You already have a head start. I will: _______________________________________ (If you are not sure what you will do, keep reading and revisit this question later.) At this point, you may doubt that you can achieve your long-term financial goal. It can be daunting to wrap your mind around how to go from barely making ends meet to having complete financial abundance. Remember, the First
  • Financial Law of Prosperity is You Must Believe. The formula to be rich is 80% belief and 20% everything else. This means, once you truly know that you will be rich, you’ve taken the single most important step toward achieving your goal. A person who believes they can accomplish a task with absolute conviction and takes purposeful action will always succeed. If you think you can do something, you leave room for doubt; know you can do something and you will harness the limitless creative power of your mind to make it a reality. The Plan When you truly believe you will be rich, you will develop and follow a plan to be rich. Consider your plan a roadmap to your destination. Like all travel plans, your exact route isn’t cast in stone. You will encounter detours, hazards, alternate routes, pit stops, and delays. Some of these encounters will bring you closer to your destination—others will take you out of your way. Only by knowing your final destination can you determine if you are headed in the right direction. Follow the steps below to create a simple plan. Step 1: On a sheet of paper, copy the following sentences and fill in the blanks with the information you gave in the previous section’s exercise.
  • 35 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << MY PLAN 1.My long-term financial goal is $___________, and I will achieve this goal by _____________ (date). 2.I will earn some of the money that will contribute to this financial goal by doing _________________ (what you are going to do to earn an income). 3.What’s my next step? ____________________ Step 2: Post your plan in a place where you will see it every morning. Step 3: Each morning, ask yourself, “What’s my next step?” Once you have the answer, you have your next task(s) that must be completed or worked on TODAY. Step 4: Always evaluate your plan and keep it simple. What’s working? What needs to change? Are you going in the right direction? Do you need to add to the plan? Do you need to learn a new skill or acquire a resource? If you are not getting the results you desire, don’t be afraid to adjust your plan and take a different approach to accomplish your goals. Don’t forget to update your plan when you finish reading this book. When you start working your plan, some of your actions will produce opportunity or luck. Once you identify such an event, seek to exploit that situation to your utmost benefit. You don’t need to create the world’s greatest plan to achieve financial success. Don’t worry about having the “right” job or making “enough” money. Your plan is a starting point. It will evolve over time as you uncover new opportunities. However, it’s critically important to have a written plan that clearly states your
  • financial goal and what you will do to earn some of the income that will contribute to your long-term financial goal. Most people wander through life and settle for what they get. These people are unmistakable; you will come upon them drifting along life’s highway, squandering their precious time and mired in their own dramas. Distinguish yourself from the wanderers by having an intelligent, executable plan, which will give you clear direction and purpose. Only settle for what you want from life. Remember, no great achievement can be accomplished without the plan to first make it happen. A fool with a plan can outsmart a genius without one. —T. Boone Pickens, billionaire
  • 37 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Share this book! 1) Print out as many copies as you like (yes, it’s 200 pages). 2) Email this PDF to your friends. –or– 3) Post this PDF on your website, facebook, and BLOG. –or– 4) Email a link to the PDF download www.BeRichBook.com Experience this book differently. Download the AUDIO BOOK from www.BeRichBook.com
  • 39 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << CHAPTER 2: THE FIRST FINANCIAL LESSON “Make a buck, spend a buck” is the exact formula for poverty. I was 8-years-old when I received my first financial lesson. My father and I were driving home on a lonely Maryland highway one dreary winter day. I was staring out the backseat window, listening to the car’s wiper blades sputter and groan to clear the freezing rain from the windshield. Most car rides with Dad were spent in silence, though he would occasionally make an effort to explain some life lesson that, once completed, typically left me more confused than enlightened. Our talk about “the birds and the bees,” for instance, baffled me for an entire decade. “Son, I want to talk to you about money,” Dad announced. “When you have a job, you have to understand that you must save for the future by putting ten percent of everything you make directly into your savings account. Once your money is in the bank, you must never spend it. If you do this, you’ll be OK.” He asked me to repeat it back to him, and then my financial lesson was over. Savings account, bank, money, job, and percents—my head was spinning. Dad, however, was satisfied with our little talk. So, I figured there was no sense in adding to my confusion and didn’t ask any questions. Unfortunately, the money education I received from my father never got any better than that. Even though he did his best to teach me what he knew, my father had little financial success in his own life.
  • Dad worked hard and dreamed of a day when he could retire in comfort. He learned too late in life that it takes more than hard work to become financially independent. He tried to improve his financial situation by investing, but his efforts yielded mixed results because he didn’t fully understand the nature of money. Like most people in this world, Dad relied on the recycled opinions of the financial “experts” for investment advice and never bothered to learn any real money management skills for himself. Dad eventually went into semi- retirement and got to do what he loved most, but he could have done it years sooner had he approached things differently. Like any responsible parent, my father tried his best to educate me financially. He gave me good advice, but he was never a rich man. Dad didn’t realize his struggles with money made more of an impression on me than his teachings. And it was from his struggles that I learned the greatest lesson of them all— learn from the mistakes of others. The Second Financial Law of Prosperity The Second Financial Law of Prosperity is Save for The Future. Take at least 10% of your primary income and save it for future investment. The remainder of your income will go toward your living expenses. By strictly following the Second Financial Law of Prosperity, you will create a supply of money that can eventually be put to work to generate investment income. Your money, once invested, will create more money on its own and help you reach your long-term financial goal. Investment is only possible, however, if you have been disciplined enough to save your money. Always save 10% of your earnings before you pay any debt or spend any of your money on living expenses, necessities, and luxuries. Also, keep your savings separate from the
  • 41 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << money you use to pay expenses, so it won’t tempt you. Never, under any circumstances, spend the money you’ve saved on anything but investment. Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. Anyone Can Do It, but Few Will Try People tend to spend everything they make regardless of how much they make. As your income increases, so does your tendency to spend. The opposite is also true. As your income decreases so does your spending. Use these natural
  • human tendencies to your advantage. When money is received, set aside at least 10%, and your spending will adjust accordingly. You can save 10% or more from your income no matter what your current financial situation. For some, this will be hard to do. The simplest way to accomplish this goal, however, is to simply do it. Most of what you buy doesn’t really serve your long-term interests or even give you much satisfaction. What spending categories can you modify or eliminate? Meeting the 10% minimum savings goal becomes easier each time you do it, because as you watch your savings grow you will get greater satisfaction from knowing your money is bringing you closer to complete financial independence. The key to adhering to the Second Financial Law of Prosperity is to understand your priorities. Do you want to have the freedom and security that money can bring, or do you want to work forever trying to make ends meet? There are plenty of things you can worry about in life. Why make money one of them? The Second Financial Law of Prosperity is designed to help you improve your future. By setting aside a portion of your income today, you lay the foundation to achieve your long-term financial goal. In doing so, however, some of your immediate desires must go temporarily unfulfilled. We all have an unlimited number of wants and it’s impossible to satisfy them all. The intelligent rich know there are limits to what their money can buy. To be rich and stay rich, you must understand that spending all of your money is the fastest way to poverty. The Second Financial Law of Prosperity is a test of your readiness to receive greater riches. If you consistently save a portion of your income and never spend it, you will prove worthy of receiving more money—slowly at first, then at an ever-increasing pace, and from unexpected sources. If, however, you continue spending everything, financial abundance will always elude you.
  • 43 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << A man and his wife had the good fortune to possess a goose which laid a golden egg every day. Lucky though they were, they soon began to think they were not getting rich fast enough, and, imagining the bird must be made of gold inside, they decided to kill it in order to secure the whole store of precious metal at once. But when they cut it open they found it was just like any other goose. Thus, they neither got rich all at once, as they had hoped, nor enjoyed any longer the daily addition to their wealth; … —Aesop’s Fables Modern Slavery It’s in your long-term best interest to be rich. Anyone who relies on someone else for their money is vulnerable to extreme financial disappointment. If you are not self-reliant, you are swimming in troubled waters. People who get rich and stay rich depend on themselves—they make their own financial dreams come true and so must you. Thought is the only real divider between the rich and the poor. Thought used to be a personal affair, but by combining psychology with traditional marketing, what you think is now greatly influenced by modern advertising. In our society, poverty is deliberately seeded and grown like crops of tomatoes with people exposed to a constant message of entitlement. We are encouraged to spend and live in excess, to constantly want more. This message is everywhere and practically inescapable. From cradle to grave, twenty-four hours a day, seven days a week, advertisements tell us, “You want it, you deserve it—now go and get it!”
  • In the wake of this social conditioning is a widening gap between the rich and the poor, with a middle class that’s rapidly disappearing. The culprits behind the message are a consortium of large businesses—“Big Business,” as I like to call them—that encourage people to stay in a perpetual state of overconsumption. They have no interest in building a wealthy society, because they wouldn’t profit immediately from it. Their methods of control are debt, psychology, and messages of entitlement designed to convince people to spend beyond their means. Billions of people worldwide are trapped in a state of financial slavery because their expenses are greater than or equal to their income. These people are in a perpetual state of financial angst because they must labor to make money and struggle to pay their bills. After the bills are paid, there’s typically nothing left over for savings and investment. This spending pattern is why the poor only get poorer. The poor are Big Business’s army of working financial slaves, because they will give their hard-earned money to everyone but themselves. Their spending is an invisible chain of slavery around their necks. Their belief that they deserve and are entitled to all the privileges money can buy without having the cash to pay for them leads to debt and never-ending payments, which is nothing more than a modern form of slavery or financial servitude.
  • 45 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << The solution to financial slavery is personal responsibility. If you want to hold someone accountable for your servitude, look no further than your closest mirror. Free yourself by making the choice to follow the Second Financial Law of Prosperity. Step up, take responsibility, and commit to real change—always save a portion of your income before you pay your bills. If you want to be rich, then start by exercising self-control. Change your mindset from “What can I spend?” to “How much can I save?” Rich and poor people think differently about money. The rich, or financially independent, think in terms of financial creation, savings, and money growth; to them, there’s an abundance of money in the world and opportunity is everywhere. The poor, or financially dependent, think in terms of getting paid, paying bills, spending, and scarcity; to them, little opportunity exists in the world and riches are available only to a privileged few. If you want to have a lot of money in your life, adopt the mindset of the rich. To experience a lifetime of financial independence, you must modify your spending habits and change the way you think about money. The financially independent save a portion of their income before they pay bills, and then invest their savings to make more money. The order of money flow is important—save money first, not last.
  • Saving money is the one disciplined act that gives a person the resources needed to begin the process of investment. Once your money has been invested properly, it will begin to create more money on its own and will be a contributing factor to the achievement of your long-term financial goal. The successful investment of money is the reason the rich get richer, and it’s what you must learn to do if you want to join them. There will always be a class system of rich and poor in society—“haves” and “have-nots.” It’s been this way for thousands of years. The system is fair because anyone can change sides—no one has to be poor unless they choose to be poor. To firmly set your feet on the road to riches, you must obey the Second Financial Law of Prosperity and save at least 10% of your earnings. Stay focused, and don’t let anything sway you from this task.
  • 47 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << The people who get rich and stay rich are self-reliant—they make their own financial dreams come true.
  • Share this book! 5) Print out as many copies as you like (yes, it’s 200 pages). 6) Email this PDF to your friends. –or– 7) Post this PDF on your website, facebook, and BLOG. –or– 8) Email a link to the PDF download www.BeRichBook.com Experience this book differently. Download the AUDIO BOOK from www.BeRichBook.com
  • 49 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << CHAPTER 3: MAKE MORE MONEY If you are a bricklayer, be the best bricklayer in town. If you are a smart bricklayer, get other people to lay the bricks for you in many towns. Nancy was a young, single mother. She had gotten pregnant as a teenager and, at her mother’s insistence, married the child’s father only to have him leave her a few months later. She was intelligent and had planned on going to college after finishing high school, but something always got in the way of that dream. Nancy was struggling to pay her rent. She was living on her own and had a full- time waitressing job. But every month it got harder to pay her bills. Desperate to avoid eviction, she made an appointment to talk with the manager of her apartment building. Roxanne politely listened to Nancy’s hardship story, but was unmoved. She had managed apartments for over thirty-four years, and every story was the same: someone couldn’t pay rent and wanted to make it the building owner’s problem. “You’ve got to pay the rent or get out,” Roxanne stated. The severity of the situation was too much for Nancy. The calm resolve that she displayed at the start of their meeting turned to panic as grim images of her future flashed through her mind. The thought of living on the streets and losing her daughter to the child protection authorities made her cry uncontrollably.
  • “I don’t have…” she started, but the words were lost in her sobs. “I don’t have anywhere to go,” she finally managed. Roxanne attempted to remain unsympathetic, but the genuine emotional pain of this young woman brought down her defenses. She reached for the box of tissue on her desk and handed it to Nancy. “Look,” she began, “I don’t know what you are willing to do to make some extra money, but I need some part-time help cleaning vacant apartments. If you want the work, it’s yours. But if you screw up, I’m going to fire you and then evict you. If this works out, you can pay me the rent after you get your first check.” Nancy agreed to take the job, and, within two weeks, she had enough money for rent. A few months passed, and she settled into a routine of working long hours at two jobs while still handling the responsibilities of raising her daughter on her own. She yearned for her free time on the weekends and dreaded Mondays. She was making ends meet and keeping her daughter happy. That was all that mattered. Roxanne soon approached Nancy and asked her to work on the weekends renting apartments for her. Roxanne told Nancy that she believed this would be a good opportunity to learn about property management as a career. Nancy had developed a lot of respect for Roxanne over the last few months and didn’t want to disappoint her. Nancy agreed and found herself saddled with a third job. With three jobs, Nancy became a scheduling whiz. Bills were easily paid, and she only had time for what was important in her life. Within three months, Nancy was making more money renting apartments on the weekend than she made cleaning them during the week. Working three jobs and raising a child on her own was difficult, though. So Nancy soon approached Roxanne to see if she could give up her cleaning job.
  • 51 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << “I’ll do you one better,” Roxanne said. “I just moved my full-time rental agent to the assistant manager position. His old job is yours if you want it. Besides, you can make the same money working this new job as you can with the other three combined.” Nancy began working with Roxanne daily. With years of experience in property management, Roxanne was a wealth of information and Nancy soaked it up like a sponge. With Roxanne’s encouragement, she enrolled in property management classes at a community college and with the local apartment association. Each day, Nancy got better at her job. It wasn’t long before she was promoted to assistant manager and received another pay raise. A few years passed and Nancy got an opportunity to become a manager at another apartment community within the same company. With this new job came another raise and more responsibility. By this time, she had earned a degree in property management and was very capable of doing the job. After five years, Nancy grew restless with her current level of success. She began to wonder if there was something else beyond the standard 9-to-5 grind. She had come a long way from near homelessness, but was no longer satisfied and felt trapped by the same old routine. Nancy knew there had to be something more to life. She was determined to find a path leading to an even better future. Nancy gave herself a five month goal to find something new. She continued to educate herself by participating in property management workshops, reading, and staying involved with her local apartment association. It was at one of these association meetings that a new opportunity emerged. She met a real estate investor who was having trouble renting apartments at one of his larger properties, which was costing him a lot of money. Nancy offered to help this
  • man for free because she wanted the experience, but he insisted on paying her in some fashion. For the next few months, Nancy worked in her spare time to train the investor’s staff and rent his vacant apartments. Once she was finished, the investor handed her a $10,000 check for her consulting work. In that moment, she found the inspiration she needed to start her own company. Nancy’s positive beliefs, desire, and hard work paid off again with another new opportunity. She was now in complete control of her financial future. The Third Financial Law of Prosperity The Third Financial Law of Prosperity is Make More Money. Create multiple sources of income to help accelerate the wealth-creation process. 80% of the money that you make from these other sources of income must be saved for future investment. The remaining 20% can be used for other lifestyle expenses. Multiple sources of income can take years off the time required to reach your long-term financial goal. For some, additional income will be earned from working extra jobs and other similar endeavors. For others, it comes from starting a new successful business. Increase your ability to make money by using your time wisely, learning new skills, and exploring new opportunities. Your ultimate goal is to create a sustainable income without the need for your physical labor and any significant ongoing investment of your personal time. To accomplish this, however, you must be an efficient manager of your personal resources.
  • 53 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. 3. Make More Money Create multiple sources of income and save 80% of this extra money for future investment.
  • Get Into the Fast Lane The infamous American bank robber, Willie Sutton, had it right when he said, “Go where the money is and go there often!” I’m not advocating bank robbery, but merely pointing out that some things pay better than others. It doesn’t matter what is going on around you. Somebody, somewhere is making buckets of money. You must find the people who are making lots of money, and learn to do what they do. Copy them. Study their habits, read their publications, and research the industries in which they are involved. Try your best to meet them and, if you can, become friends. If you do get to meet with them, make sure you are prepared and ask lots of questions, including: 1) If you had to do it all over again, where would you start? 2) What words of advice would you give to someone wanting to duplicate your success? 3) What’s the best way to make money in today’s business environment? 4) What were some of your biggest mistakes that delayed your success? There are many roads to riches. Talk to the travelers who have already paved their roads with gold, because the successes of others can be duplicated and improved on. By learning successful moneymaking strategies from other people, you can take years off your journey to become financially independent. Learn how to make money without having to “reinvent the wheel” or waste valuable resources on trial and error. Like a modern highway, the road to riches has more than one lane, so shift gears and get into the moneymaking fast lane!
  • 55 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Time Is A Limited Resource People will spend more time to entertain and distract themselves than they would ever consider using to become financially independent. It takes a significant time commitment and level of maturity to be rich. This is more than most people are willing to give. How someone spends their time affects whether or not they will become rich. Do you find yourself talking on the phone, texting, emailing, surfing the Internet, and playing video games when you should be doing other things? I’m not going to begrudge someone for distracting themselves when they could be working toward their financial freedom. After all, our society needs its share of financially poor laborers if it’s to function properly! People who willingly trade their opportunity to become financially independent for a distraction are the “Rather Be’s” of the world—you know—“I’d rather be doing this” or “I’d rather be doing that.” Time is a limited resource. I understand that the dog needs to be walked, you have to spend time with family, you’ve got plans for the weekend, your friends need face time, you’ve got to squeeze in a round of golf, and you need some personal time. We all have responsibilities and pleasures that occupy our time. If, however, you intend to be rich, you must learn there’s a time and place for everything, and everything you do must be done smartly. The passage of time can be a threat to the achievement of your financial independence. Be judicious and guarded with your time because it’s the most precious resource you have. Time is the currency of self-improvement and must be spent wisely. Spend more time educating yourself and developing multiple sources of income, and spend less time on things that trap you in your current lifestyle.
  • Why invest hours of your day watching television and playing on the Internet, when you can put your “time currency” into research, interviewing successful people, and learning how to go from flat broke to financially independent? The time you take away from the things you would rather be doing and give to the things you should be doing to be rich, is a sacrifice you must make to reach your financial goal. Your time is the most precious resource you have. Spend it wisely. Time is the currency of self-improvement. Knowledge That’s Richly Rewarded Your brain is your greatest wealth creation asset. You must fill it with information that will help you to achieve your goals. If you want to make money, you must develop and foster skills that are highly rewarded by society. Learn to specialize. A college education is an important part of this process, but not critical if you are committed to self-education. Statistically speaking, college graduates make more money, thanks, in part, to their demonstrated ability to set and achieve long-term goals. This doesn’t mean you should go to school, collect a plethora of degrees, and burden yourself with mountains of debt on the mistaken belief that multiple degrees will automatically make you rich. Education without purpose can be a cleverly disguised distraction from the achievement of your long-term financial goal. And let’s face it—some college degrees have more value to society than others. Knowledge alone is no guarantee you will be rich. Look no further than your typical school teacher and you will discover some of the most educated people in this world are nowhere close to becoming financially independent. Teachers
  • 57 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << are not richly rewarded by society for the job they do, so they must pursue riches outside of the classroom if it’s important to them. Some teachers do get rich, and they will tell you that knowledge was only a part of that process. Knowledge by itself is not power. It’s possibility. The power to become rich is hidden within knowledge and can only be extracted when it’s combined with intelligence and purposeful action. You must learn and then successfully accomplish an endeavor that has a high value to society if you want to make lots of money. Possessing a richly rewarded skill is the most common way, but not the only way, to create your financial independence. Whatever you decide to do, the learning process never stops. Successful people constantly educate themselves. They read books, take classes, read trade and financial publications, do research, attend seminars, listen to audio books, learn from other successful people, and explore new ideas. You must continually fill your brain with useful knowledge as well and apply it to society’s problems in a meaningful way. Your best tool for creating riches is the grey matter between your ears. Again, a college degree is not a prerequisite for financial independence. Bill Gates didn’t have a college degree before he founded Microsoft and went on to become one of the richest men in the world. But he was highly educated and possessed specialized knowledge. If you want to make an abundance of money, you must become educated in something that’s financially rewarding and then take purposeful action. Knowledge by itself is not power. It’s possibility.
  • Two Ways to Make Money There are only two ways to make money in this world: with your brain or your brawn. There’s an immense difference between these two methods, because one can be scaled while the other cannot. One has virtually unlimited income potential, while the other is limited by personal involvement and time. The single most important factor in determining which category a money-making opportunity falls into is your involvement. If you work somewhere that requires you to be present, you are working by brawn. This means you are the critical element to the economic equation that determines your income. And without your participation at some level, money won’t be received. Maybe you own the company, are salaried, get paid hourly, receive a commission, or are an independent contractor. The one fatal flaw to your business model is you. There’s just one you and only a certain number of hours in a workday, which limits the things that can be accomplished. To get better results, you push these limits by working harder and longer, but there are still only 24 hours in a day. “BRAWN-work” has limitations that will drain you both physically and emotionally, and could end up killing you. The total number of hours you can work in a day is an absolute boundary to your productivity and, therefore, limits the amount of money you can make. Alternatively, if you have investments and a business that makes money but requires little or none of your time to manage, you are working with your brain. Like BRAWN-work, the acid test for “BRAIN-work” is the extent of your involvement. Can you walk away from whatever you are doing for a few months and not experience a significant drop in income? If so, this is a good indicator
  • 59 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << you are working with your brain. People engaged in BRAIN-work have removed themselves as the critical part of their money-making system. They work because they want to, not because they have to. True BRAIN-work is neither physically nor emotionally draining. BRAIN-work eliminates the boundaries on scale, allowing you to automate and grow. For instance, after Ray Kroc bought McDonald’s from the McDonald brothers, he did not stand around cooking hamburgers for hungry customers all day long. He perfected his Fast Food Business Model, and then he grew, or scaled, his business from a handful of locations to over 32,000 restaurants worldwide.
  • BRAIN-work and BRAWN-work are the only two ways to make money. The money that can be made with BRAWN-work is limited by your personal involvement and time. BRAIN-work has no such limits and can be scaled. Intelligently scaling your system of moneymaking to massive proportions is the difference between making a million dollars and a billion dollars. If you want to be rich—and I mean roll-around-in-your-own-private-vault rich—you need to work using your brain and then scale up your successful moneymaking system. The BRAIN-work Challenge True BRAIN-work eludes most people, even though the rewards are well worth the efforts required to create it. BRAIN-work is defined as a system of making money that requires little or no ongoing involvement from you. It is a virtual cash machine. It can make you money while you sleep. There are many ways to create BRAIN-work; it can be as simple as having a series of passive investments, a traditional business others manage for you, or an automated Internet business that works for you around the clock.
  • 61 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Remember that one product, idea, or design you have rolling around in your head? You know, the one that always makes you think, “This would be a great idea if….” Now, imagine sharing your idea with people in every corner of the planet and then getting paid for it. Can you afford to pass on that prospect? Everyone has an expertise or a moneymaking idea about something. What could you do to make money utilizing BRAIN-work? I challenge you to develop a BRAIN-work system of making money. If you already have a BRAIN-work system of making money, create another. The key to developing any successful business is to discover a need, void, or want in the marketplace and then use your talents to satisfy it. Maybe you can invent something useful, improve on an existing product, create a new process for doing something, or sell a critical service. Is there something you do and know about in your current BRAWN-work job that can be changed to BRAIN-work? There are thousands of things that you could do, but “I don’t know” isn’t one of them. If you approach this challenge with an open mind and take intelligent action, you will find a BRAIN-work method of making money. After you’ve generated a few ideas for BRAIN-work, your next step is research. The answers to all the reasons why you can’t complete this challenge and any problems you encounter along the way are contained in a book, found on the Internet, understood by someone else, and taught in a class. Find the solutions you need to create your BRAIN-work. It’s critically important that you believe you can create BRAIN-work. If you get stuck, find another way. If your BRAIN-work turns out to be a bad idea, find a better idea. Whatever happens, you must not give up. Your success depends on your idea, your determination, and your ability to execute a meaningful plan.
  • Scaling your system of moneymaking to massive proportions is the difference between making a million dollars and a billion dollars.
  • 63 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << CHAPTER 4: GREED IS A MONSTER WITHIN To live life the hard way, work for your money, spend it all, and make no provisions for the future. Alexander was a greasy-haired, boisterous, fat man completely obsessed with living the lifestyle of the rich and famous. A bachelor in his mid-50s, he was the center of his own universe, and people seemed to shuffle in and out of his life like the regular cadence of waves crashing upon a rocky shore. There was no separating him from his vanity; it was his identity, and to be deprived of it would be the loss of his sole purpose in life. Alexander liked to be the center of attention. He traveled to exotic places and sought to be seen at the trendiest spots in town. He bought the latest fashions, the newest luxury automobiles, expensive jewelry, and other flashy status symbols. To him, it was important to maintain the appearance of a lavish lifestyle, because it was the tool he used to demonstrate his wealth and gain the respect of others. Even with all of the wonderful luxuries that surrounded Alexander, he was a troubled and lonely man. The people in his life all shared his core values, and his relationships with them were never wholly gratifying. He didn’t realize his vanity cost him what he needed most—true love and belonging with people who really cared about him.
  • Alexander financed his lifestyle with the income he got from a series of moneymaking schemes he offered to hapless investors. Money made, money spent—every dollar he received was funneled back into his ever-growing lifestyle. Only Alexander benefited from his business dealings, and his generosity went as far as his own interests would allow. In his wake, he left tangled wreckage from the hopes and dreams of the naïve who had trusted him with their money and were poorer for their experience. Extravagant lifestyles are expensive and difficult to maintain. Eventually, Alexander’s income couldn’t keep pace with his ballooning expenses. His credit cards maxed out, banks refused to lend him money, and there was no one new to pay into his investment ideas. His world started to crumble. He became reflective about his financial hardship, but never seriously considered changing his lifestyle. He needed more money and he needed it fast. Alexander decided to create another type of investment, and told everyone he knew that it would double their money every few weeks using the power of the Internet. He produced charts and graphs to prove that his idea worked and promoted it as the “Magical Money Machine.” A few people invested in this magical machine and, for a while, it worked. Early investors doubled and even tripled their money. As news of this magical machine’s success spread, thousands of people lined up to invest with him. His machine had saved him from financial ruin. He now had more money than he knew what to do with, and he spent it on anything he fancied: a Beverly Hills mansion, a yacht, vacation homes, and a private jet were just some of the things he purchased. He was a playboy at the zenith of his popularity and the toast of the town. Alexander, however, had a secret. Like all of his past investment ideas, the Magical Money Machine didn’t really work. It was an elaborate hoax that he had concocted out of desperation. It was nothing more than a “Ponzi scheme,” paying early investors with the money received from later investors. He never
  • 65 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << imagined that so many people would jump at the opportunity to invest with him merely by promising them outlandish returns on their money. His machine had appealed to their greed, and they couldn’t resist such a fantastic opportunity to satisfy it. Alexander’s money problems soon returned. His lifestyle expenses exceed his income once more, and the Ponzi scheme was on the verge of collapse. He knew it was only a matter of time before his investors figured out they had been cheated. The day came when Alexander simply vanished. Some people suspected foul play while others thought that he went on an extended vacation and would return shortly. At first, it didn’t occur to anyone that he had skipped town with the remainder of their money, but that’s exactly what Alexander had done. He was never seen or heard from again. The Fourth Financial Law of Prosperity The Fourth Financial Law of Prosperity is Live a Sustainable Lifestyle. Avoid the lifestyle trap and maintain a sustainable standard of living that will help you accomplish your long-term financial goal. You must first create a sustainable source of income (discussed in Chapter Eight) before you can have a sustainably affluent lifestyle. It’s important to consider the long-term effects of your buying decisions. Everything you can buy, possess or control has a cost of ownership, which can keep you from achieving your financial goal by saddling you with extra expenses and costs. Accumulate assets that contribute to your financial goal, and avoid,
  • or quickly discard, items that burden you with high ownership costs. Having possessions and privileges in your life doesn’t automatically mean you have a problem with your lifestyle. However, your lifestyle spending (housing, utilities, food, clothing, charitable giving, dining out, entertainment, travel, fuel, insurance, bills, taxes, etc.) must never be allowed to grow out of control and exceed 90% of your total income. The Ten Financial Laws of Prosperity are less about squeezing your personal finances into one-size-fits-all percentages as they are about intelligently managing expenditures while creating and protecting your wealth. It’s important to remember that the application and interpretation of these Laws can vary with individual circumstances. Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. 3. Make More Money Create multiple sources of income and save 80% of this extra money for future investment. 4. Live a Sustainable Lifestyle Avoid the lifestyle trap, and recognize that the things you buy can have unforeseen ownership costs.
  • 67 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << The Lifestyle Trap and Human Need A person’s lifestyle, or the way they live, is a physical expression of their values and beliefs. People often spend beyond their means in an attempt to achieve their ideal lifestyle. Over time, more and more of a person’s financial resources go toward maintaining their lifestyle, leaving little money for anything else. This behavior is known as a lifestyle trap, and unwittingly costs its victims their financial independence. A lifestyle trap diverts a person’s attention away from the long-term effects of their reckless money management, and focuses it on the immediate need to sustain their current standard of living. What drives these lifestyle spending decisions? Are “new,” “more,” “different,” and “better,” the only driving forces behind the purchase of goods and services? Is keeping up with the Jones really that important? As it turns out, there are psychological reasons for this type of human behavior. In his book Motivation and Personality, Abraham H. Maslow explains that all humans attempt to meet a certain ranking, or hierarchy, of needs. He describes five levels of human need and the relative order in which people will attempt to satisfy those needs. According to Maslow’s theory, a person cannot satisfy needs ranked higher on the hierarchy without first satisfying needs at the bottom. This means that we will satisfy our basic needs for survival before we attempt to do anything else. For example, it would be hard for you to pursue your need for “love and belonging” if you were lost in the woods freezing to death. Below are Maslow’s five categories of human need and the primary order in which they can be satisfied: 1) Physiological: These basic human needs are necessary for our survival. They include: air, water, food, shelter, clothing, and sleep. You can’t survive without meeting these needs, so they are first on the hierarchy, and the most important.
  • 2) Safety: We all need to feel safe and secure in our environment. We cannot thrive if we are afraid. Feelings of safety can come from physical health, law and order, justice, financial wellbeing, and irrevocable human rights. When we feel safe in our environment, we will pursue our next level of need. 3) Love and Belonging: Once a person has met their basic needs for survival and safety needs, he or she will seek to have meaningful relationships with other people. We are social beings with a need for love, belonging, and acceptance. These needs can be met through friendship, family, intimate relationships and other social interactions. 4) Esteem: Once a person feels love and belonging, he or she will seek to be valued and accepted for the contributions they make to his or her peer groups and society. Esteem needs can be met through personal and professional achievement, volunteer work, receiving recognition, and gaining respect from others. 5) Self-Actualization: When a person has achieved all of their other needs on this hierarchy, he or she will seek self-actualization, or the desire to find meaning and fulfill his or her purpose in life. Everyone must discover how to bring meaning and fulfillment to their lives with the talents they have been given. Without a purpose, we become dissatisfied and lose our appreciation for life. You must find and fulfill your purpose to discover how wonderful and satisfying life can truly be.
  • 69 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Everything we do, whether a positive or negative behavior, is an attempt to meet one or more of our five human needs. Sometimes, a person will get stuck trying to meet one level of need and cannot progress to the next level. To understand why people do the things they do, you must first understand what needs they are trying to satisfy with a particular behavior. Money, for instance, can be used to meet nearly all of your physiological needs (food, water, shelter, etc.), though once you move beyond the basics needed for survival, you begin to use money to meet your emotional and mental needs farther up the hierarchy. This is the point where satisfying your human needs, spending money, and the desire to live a certain lifestyle all collide. How do you use money to meet your five needs? Human needs typically are uncovered by the feelings associated with and the motivation behind a purchase. For instance, if you trade in your perfectly good car for a newer model to get respect from your friends, you are trying to satisfy your need for Esteem. If you bought the car as a gift to win back your significant other, you are seeking to satisfy your need for Love and Belonging.
  • When you are caught up in a lifestyle trap or have a spending problem, the reason why has nothing to do with other people and everything to do with you. Everything you spend money on is an attempt to meet one or more of your five human needs. To break a cycle of needless spending, you must identify which of these needs you are trying to satisfy with your purchases, and then consider the long-term financial consequences of your actions. Is the short-term benefit of your spending worth the ultimate sacrifice of your financial independence? You must find and fulfill your purpose to discover how wonderful and satisfying life can truly be. The Lifestyle Fence Society tends to measure prosperity by where a person lives, their profession, and what they own. There’s also another measure of prosperity based on the perceived quality of the material things that a person has in his life. If someone were to drive up to an expensive high-class hotel in an economy car, rather than a luxury automobile, many would expect the parking valet to inform the driver that the employee entrance is at the rear of the building! Driving an economy car in our society is not considered to be a sign of prosperity, but if you drive a luxury automobile people automatically assume that you are rich. It’s this misconception of what it means to be rich that helps set up people for a lifetime of financial failure. We have been conditioned from an early age to believe wealth means material possessions, and if we have the right “stuff,” we are rich. Not surprisingly, when most people get money, they try to live up to this societal image by spending it all on—you guessed it—stuff. While it is undeniable that the rich have more possessions and privileges simply because they have money, most people fail to recognize what it really takes to become sustainably rich—hard work, creativity, time, and discipline. So, naturally, when someone with this stereotypical belief
  • 71 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << gets money, and has access to money in the form of credit, they spend it in an effort to attain the appearance of wealth. People, who use money and credit to fit in with society’s stereotypes or images of wealth, are pretenders and spenders. They will always struggle to maintain a lifestyle they haven’t really earned. These people have yet to understand that they must first create a sustainable source of income before they can have a sustainably affluent lifestyle. There’s no harm in looking over the lifestyle fence and saying, “Gee, I wish I owned that big house and luxury sports car.” For some, this will be the defining moment in which they change their approach to acquiring money and decide to become financially independent. Most people, however, will continue chasing a lifestyle they can’t sustain over the long-term. They will never experience a lifetime of financial independence, because they are clueless about what it really takes to be sustainably rich. Having possessions and privileges in your life doesn’t necessarily mean you have a problem with your lifestyle. The Ten Financial Laws of Prosperity allocate up to 90% of your total income to be spent on your lifestyle, though your 90% won’t match someone else’s 90% if you have different income levels. For example, a person who makes a million dollars per year can spend nine hundred thousand dollars of that income on their lifestyle. This allows them to buy a lot more stuff than someone who only makes fifty thousand dollars per year. Spending only becomes a problem if your expenses exceed your income and you are not saving a meaningful amount for future investment. The Ten Financial Laws of Prosperity work universally for everyone, but not everyone is willing to do the work needed to achieve their financial independence. When a person who is poor looks at the lifestyle of the rich, they tend to see only the benefits of money and not the hard work, discipline, and
  • time it took to create the source of money that supports that particular lifestyle. Anyone can be rich if they are willing to do the work required to accomplish this goal. However, they must understand that they need to create a sustainable source of income before they can have a sustainably affluent lifestyle. The True Cost of Ownership Have you ever stopped to consider the long-term effects of your buying decisions? Price is what you initially pay for an item. But what you might not realize is its true cost of ownership over time. Everything you can buy, possess, and control has a cost of ownership. These costs can be obvious, like a monthly service fee for your telephone, or something you never really considered before, such as depreciation on your car, the amount of time it takes to maintain an item, or the cost to feed and care for an animal. A direct cost of ownership is any monetary cost directly attributable to an item you own. The price you pay for something is a direct cost. Another direct cost is depreciation, or an item’s loss of value over time due to its use and obsolescence. Other direct costs include add-on sales, service fees, storage costs, taxes, maintenance costs, loss from spoilage, fuel, and insurance premiums. An indirect cost of ownership is any nonmonetary cost attributable to an item you own. Compared to direct costs, indirect costs are a little harder to spot. Common indirect costs include the amount of unpaid time and physical effort spent taking care of an item owned or in your control. Your unpaid time and effort spent cleaning a fish bowl is an indirect cost of goldfish ownership. Example: The ownership costs of a boat
  • 73 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Direct Indirect Price paid for the boat Time spent cleaning Insurance Time spent maintaining Maintenance Wear & tear on your tow vehicle Docking fees Time spent in boating class Fuel Time spent preparing for use Registration fees Other? Add-ons: lifejackets, boat hook, rope, trailer, etc. Depreciation (loss of value) Storage fees Other? Everything you have in your life has a cost of ownership that can be measured by the direct and indirect costs associated with it. Things with a high cost of ownership make you poorer. Things that create more resources than they consume make you richer. Anything that makes you richer and is a store of value can be considered an asset. Assets create more resources than they consume or have intrinsic value; therefore, the benefits of ownership should always outweigh any associated ongoing cost. You must own and cultivate resource-producing assets if you want to have a lifetime of financial independence. Ownership of anything can be debt and obligation in disguise. The vast majority of people spend their money on things that have a high cost of ownership, making it virtually impossible for them to become financially independent. They accumulate possessions and services that constantly nibble at their wallets and steal away valuable time that could have been better spent on more productive endeavors. Avoiding the purchase of goods and services with a high cost of
  • ownership can minimize “expense creep,” or the growing financial burden of expenditures over time. Always take the time to consider the true cost of ownership for the things you want to buy and keep in your life. Accumulate assets that support your financial goals, making you richer, and avoid, or quickly discard, items that make you poorer. You must learn to minimize your ownership costs before you can enjoy a lifetime of financial independence. Consider buying “used” instead of “new” to reduce the price you pay for an item, or rent it to avoid the long-term costs of ownership entirely. Before you buy, ask yourself, “Will this purchase make me richer or poorer?” Some would consider this sort of behavior to be cheap, frugal, stingy, tight, and miserly, but, for the financially independent, this behavior is intelligent and necessary. Before you can be rich, you must stop acting poor and take a more enlightened approach toward ownership. Minimize the negative effects of “expense creep” in your life. Consider your true cost of ownership prior to making any purchases with your money while keeping in mind that some costs are measured in time and effort and may not be so obvious. Learn to accumulate assets that contribute to your financial goals, and avoid or quickly get rid of items that burden you with a high cost of ownership. It’s important to understand how certain purchases can help you reach your financial independence and others will set you back. A moment of gratification and stroke of the ego that an unwise purchase will give you is not equivalent to the satisfaction you would receive if you were sustainably rich. Don’t let a financial crisis be your alarm clock. Live a sustainable lifestyle.
  • 75 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << CHAPTER 5: YOUR THREE GIFTS A person with a golden heart can do more good rich than they could everimagine poor. It was in the name of God and the Bible’s Ten Commandments that the rebel group known as the Lord’s Resistance Army (LRA) poured out of the hills and descended on a small village in northern Uganda like a plague of locusts. The sun was beginning to rise as the LRA’s child soldiers set about their unholy work of setting ablaze the thatched roofs on the mudbrick huts and murdering their inhabitants. The village was taken completely by surprise. Their able-bodied men had left the day before to defend a neighboring community, leaving their women, children, and elderly behind to fend for themselves. Abraham, a skinny 8-year-old boy with dark, wiry hair, was left in charge of the family during his father’s absence. He was the first to wake at the smell of smoke filling the hut, and he quickly roused his mother, who gasped in horror at the sight of the spreading fire. She scooped up Abraham’s baby brother and younger sister, then shuttled her family out of the burning structure. They entered into chaos created by the LRA. Terrified screams and cries could be heard above the laughter and excitement of the child soldiers as they enjoyed their wicked fun. Thick, acrid smoke billowed from the blazing huts, which made it difficult for Abraham to see and breathe. The entire village was in
  • motion. Confused smoky shadows ran wildly about. His family raced through the village, and took cover behind whatever they could find to avoid detection by the child soldiers. They were almost out of the village when Abraham’s baby brother, frightened, started to cry, alerting the young marauders to the escape. Four soldiers wielding machetes and clubs took pursuit and eventually captured Abraham’s mother and baby brother. Two of the soldiers continued after Abraham and his sister, while the other pair stayed behind and bludgeoned their helpless captives to death like seal pups in a bloody harvest. The pursuing soldiers were faster and gained on them. There was no time to think, but Abraham had to do something or he and his sister would both be caught. “Keep running! I will find you!” Abraham shouted to his sister. He turned to face his attackers. Outnumbered and unarmed, it wasn’t much of a fight. Abraham was quickly clubbed to the ground, but his sister managed to escape. Once all life had been extinguished at the village, Abraham and the other abducted children were marched to the LRA’s base camp, where they learned that they, too, would serve in the Lord’s Resistance Army. And so it was. Captured boys were made into soldiers, and girls were used as sex slaves. All manner of civility, self-respect, and youthful innocence was ripped from them. In time, they were turned into killers, wild animals feeding on the carcass of a once moral society in one murderous spree after another. Their actions orchestrated by men convinced of their own self-righteousness by acting in the name of God.
  • 77 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Samantha Garcia, a 34-year-old American volunteer, was working in Lira, Uganda, to rebuild an orphanage. She came from a society with little understanding of the devastations of war, cultural hopelessness, abject poverty, and widespread hunger. When she learned about the plight of the Ugandan people, however, she felt compelled to help. Samantha was moved by the suffering of others, and she felt an inner calling to help these distant strangers in need. She ignored her peers who told her not to go, that it was too dangerous, and that she couldn’t make a difference. Samantha knew she had to do something. That particular something came as a program designed to help rehabilitate Uganda’s child soldiers by teaching them construction skills. Two decades of bloody civil war had come to an end, and the children who were conditioned to a life of violence and destruction had nowhere to turn and needed to learn productive skills if they were to successfully rejoin society. Volunteers were asked to work with the children, rebuilding structures destroyed during the war. This is where Samantha met Abraham. Samantha worked alongside Abraham for many days. During this time, she gained his trust and they talked at length. She learned that Abraham and his sister were orphans living on the outskirts of town. Their house had a dirt floor and was nothing more than a shanty made from scavenged materials. They survived by stealing food from the market and received aid from Christian missionaries. As his story unfolded, Samantha realized what an incredibly hard life this boy had. Nothing she had ever dealt with compared to the suffering endured by him and others who have had their lives shattered by the realities of war. Abraham also took an interest in Samantha. He enjoyed hearing of her life in America; he was especially eager to learn about the different subjects American students studied in school; he marveled at the wonders of snow skiing, action
  • movies, and rock concerts. Their connection deepened daily. By the end of her stay, Abraham was no longer a statistic or another face among the millions affected by the brutalities of war—he was a real person who needed help. His story had become part of Samantha’s life, and his pain had touched her. Samantha’s time in Uganda passed quickly, and soon, she bid farewell to her young friend. She made many sacrifices to be a volunteer, but was glad to finally be going home. However, during the long flight back to the United States, Samantha was haunted by one reoccurring thought: “You can do more to help.” Eight months later, Samantha, her family, and friends stood in the airport waiting area for arriving international passengers. Led by an airline employee, Abraham and his sister crossed the U.S. Customs checkpoint exit. Abraham, upon seeing Samantha, ran to her, took her by the hand and started to cry. Samantha embraced him for a long moment and said, “Abraham, I would like to introduce you to some good friends of mine and your new family.” Samantha would always remember the exact moment when she was inspired to do more to help. The source of inspiration is never as important as its effect. What matters most is that one person took the time to help another in need and, in doing so, made the world a better place for us all. The Fifth Financial Law of Prosperity The Fifth Financial Law of Prosperity is Help Those In Need. Give the gifts of money, time, and forgiveness to those in need. The simple act of giving provides purpose, a sense of accomplishment, and adds meaning to life. No cause is greater and no deeds more worthy than assisting the needy.
  • 79 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << A life spent without knowing the joys of giving is a life half-lived. To be rich doesn’t solely imply acquiring an abundance of material and financial wealth. A person can be rich financially and poor in giving, or they can be poor financially and rich in giving. But in the end, such a person could have done more to help both themselves and others. The Ten Financial Laws of Prosperity teach balance—to be rich financially and to be rich in giving. Achieving this balance in one’s life is the only way to find the thing that matters most—a fulfilling happiness that nurtures the soul and is the source of true wealth. Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. 3. Make More Money Create multiple sources of income and save 80% of this extra money for future investment. 4. Live a Sustainable Lifestyle Avoid the lifestyle trap, and recognize that the things you buy can have unforeseen ownership costs. 5. Help Those In Need Give the gifts of money, time, and forgiveness to the needy.
  • Your Three Gifts There are three gifts you can give that will make our world a better place for generations to come. The simple act of giving provides purpose and adds a sense of accomplishment to your life. Giving is a personal choice to help the suffering. It is a sign that you are a person who does not dwell solely in the microcosm of the self and are sensitive to the needs of others. Everyone has three gifts that they can give to the needy. The amount you give depends on your own individual sense of generosity and the resources you have available to you. No matter what is happening in your life, you can always choose to give these three gifts: 1) The Gift of Money: For every dollar of personal income you receive, immediately give a portion of it away. This is part of your lifestyle expense. Try to give 10% or whatever you can afford to worthy causes. Find causes you believe in and allocate your funds accordingly. Many people have difficulty giving away their money; however, monetary donations are essential for procuring resources for the needy such as food, medicine, housing, clothing, and education. Volunteers at a soup kitchen can do little to feed the hungry if someone else didn’t first donate the money to buy the food and pay the rent and utility bills for the kitchen facility. Remember, poverty is always hardest on the poor and your financial donations can make a huge difference in their lives. 2) The Gift of Time: Time is your most precious possession because it is limited. Your time volunteered to charitable causes as a worker, mentor, and teacher can make a dramatic difference in the lives of others. What can you do with your time and talents that would help someone in need? What valuable skill could you teach to help people decrease their dependence on others? Try to donate two or more hours a week to charitable projects. Remember to have some fun while helping others, and don’t be afraid to get your hands dirty. 3) The Gift of Forgiveness: Forgiveness may not seem like your traditional tool for developing riches, because unlike money and time, it can’t be measured. Yet,
  • 81 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << the effects of forgiveness on your quality of life are profound. The simple act of forgiveness heals by relieving us from the burdens that obstruct our enjoyment of life. Forgiveness enables us to rebuild, strengthen, and enjoy our relationships with other people. To have true wealth, you must forgive both yourself and others. Forgiveness enables us to move beyond hurtful events by breaking the chains of anger, hurt, guilt, and resentment that bind us to those events. Forgiveness is a conscious decision to acknowledge and let go of an event. It doesn’t mean you have to like and condone an event, only that you will no longer dwell on and harbor ill feelings about it. There is power, strength, and freedom in the act of forgiveness. Forgiveness heals, allowing meaningful love to exist, and helps you to develop and maintain deep, gratifying relationships with other people. Give just for the sake of giving. Selfless giving occurs when there is no expectation of recognition and reward for your actions. The simple act of giving is, in itself, the greatest reward you could ever hope to receive. It enriches the soul and contributes to your long-term happiness. To give selflessly is to give without the expectation of recognition and reward; however, this doesn’t mean you cannot accept return gifts. Gratitude, a gift from the heart, is one of the most common return gifts you will receive. When a hungry man gives sincere thanks to another who gave him food, he’s bestowing a return gift of gratitude. There’s no harm in receiving a person’s gratitude and accepting other unsolicited tokens of appreciation. Accept all reasonable heartfelt gifts to perpetuate and expand the giving process. When appropriate, ask people to repay your gifts by giving to others in need. This can cause a single gift from you to be multiplied many times over. No cause is greater and deed more worthy than giving to the needy. The act of giving adds meaning and purpose to life. Make the choice to help the needy and start giving your three gifts today.
  • A Random Act of Kindness One of the most rewarding forms of giving is a random act of kindness, because it’s immediate and unexpected. I was introduced to this one day when I ordered a cup of coffee at a local coffee house and reached for my wallet, only to be told by the cashier that there was no charge. A gentleman on my left then handed the cashier money, and I got a free coffee! I thanked the man profusely and tried to repay him. He politely refused and told me if I really wanted to thank him, he would appreciate it if I performed a random act of kindness for someone else. I agreed and have been hooked on this form of giving ever since. Try it. I’m sure you will agree being kind to others is very rewarding. Here are some ideas to get you started: 1) Say hello, wave, and smile at people you don’t know. 2) Buy a stranger a meal or a cup of coffee. 3) If you are approached by someone begging for money to buy food in front of a grocery store, bring them into the store, give them a hand basket, and tell them to fill it with food. Once they are done, pay for their groceries. 4) Give a bottle of water and a sandwich to a homeless person without them asking. 5) Smile, look at, and listen to the next beggar or homeless person who talks to you. They have a genuine need for help. Some people are lonely and only want a few minutes of conversation to make them feel human again. 6) Be courteous and friendly to other drivers on the road. 7) Visit a retirement home. Listen to the stories that the elderly will tell—you may learn something.
  • 83 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << 8) Help the needy with the skills you use in your everyday professional life. Every now and again, you can afford to cut someone a break or work for free. The World Needs More Heroes A few years ago in a crowded upscale movie theater, an irate hulk of a man was about to make good on his promise to “take apart” an elderly couple, because they had politely asked him to stop talking to his girlfriend during the movie. I couldn’t believe what I was seeing. Two defenseless people were about to be beaten up in front of 233 onlookers and not one person was going to lift a finger to stop it. Tensions rose in the theater as the angry man grabbed the old couple by their shirts. I could no longer sit and watch this happen. My heart raced with fear as I stood up and said in my toughest voice, “You’ll be going through me first!” The man looked at me in disbelief. “You got it, pal!” he snarled back. He let go of the elderly couple and angrily climbed the theater steps to the row where I was standing. It was at that moment I realized, that in order to play the hero, you must also accept the consequences of your actions. And I was about to be mauled by a grizzly of a man for an elderly couple I didn’t even know. Before any punches were thrown, another voice boomed through the dark movie theater, but this voice was gravelly, deep, and carried like the sound of a lion roaring on the open savannah.
  • “NO. I AM FIRST!” This new challenger stopped the aggressive man in his tracks. The angry man told us both to “go to hell” and returned to his seat, and then he and his girlfriend quickly left the movie theater. Needless to say, I was very relieved at the final outcome. Would the physical beating that I could have taken for two frail and defenseless strangers have been worth it? Yes. There are a few defining moments in life when a person can choose to demonstrate remarkable character by rising to meet an extraordinary challenge, or shrink from that challenge and be forced to live with the stains of shame and regret. We all have challenges in life. How we choose to meet these challenges reveals our true character. Working with the poor, feeding the hungry, promoting peace, supporting human rights, helping a stranger in need—what cause will you stand up for? What will life’s challenges reveal about your character? Do you have the courage to Help Those In Need and do the right thing when circumstances call on you to act? The world needs more heroes—we must all answer the call. To those who are quick to wield the sword, I say let your first blow fall upon your own breast, and cleave from your heart all ignorance, malice, and discontent. Snip the puppeteer’s strings
  • 85 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << and then you will know if you should extend your hand in reconciliation or pierce an enemy with your unforgiving steel. -Dan Dulin, Author
  • Share this book! 1) Print out as many copies as you like (yes, it’s 200 pages). 2) Email this PDF to your friends. –or– 3) Post this PDF on your website, facebook, and BLOG. –or– 4) Email a link to the PDF download www.BeRichBook.com Experience this book differently. Download the AUDIO BOOK from www.BeRichBook.com
  • 87 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Chapter 6: A Twist of Fate There is no accounting for life’s randomness—you can be the king of the hill one day, and the next, find yourself rolling down it. “Stick out your tongue and say ahhh,” Dr. Baker said to his 5-year-old patient, who sat fidgeting on the paper-covered examination table. “Ahh-hhh,” the boy mimicked, his tongue extending over his lower lip. The doctor placed a wooden tongue depressor into the boy’s mouth. “What’s your favorite flavor?” he asked, studying the back of the child’s throat. “G-ww-ape,” the boy struggled to say. Dr. Baker promptly switched the tongue depressor for a grape lollipop, bringing a big grin to his young patient’s face. After a few minutes of discussing his diagnosis with the boy’s mother, the doctor left the exam room and was off to see his next patient. Samuel Baker was a prominent African-American doctor who graduated with honors from Harvard Medical School in 1968. He rose above the challenges and obstacles erected by the prejudices of others to successfully pursue his dream of opening his own medical practice in Chicago. He had a passion for helping people and felt blessed that he could do the work he loved so much.
  • Even though his practice was located in a big city, he considered himself a “simple country doctor,” making a point to know as much as he could about each patient. Accomplishing such a feat took time and often put him behind schedule, but it was this quality that made him truly exceptional at what he did. Dr. Baker was a family man with two beautiful children and a devoted wife. Balancing the rigors of a thriving medical practice with the demands of a busy home life proved challenging at times, but he managed. Occasionally, his duties at the practice would force him to miss dinner with the family, and his wife was always quick to remind him about his responsibilities as a father and husband. He didn’t mind these rare spats however, because he knew she loved him and all would be forgiven. The doctor’s life wasn’t perfect and he, like most people, had financial worries. He had medical school loans; there were costs involved with running his growing practice, car payments, household expenses, and the mortgage on his house, and other concerns. Lately, he had been troubled with the prospect of putting his children through college, and his youngest son had expressed an interest in becoming a doctor himself. He knew that he needed to start planning for the future. Busy days turned into busy weeks, months rolled into years, and Dr. Baker made little progress with his financial planning. There was always something getting in the way: patient emergencies, medical conferences, managing the practice, and handling the pressing responsibilities of family life. The stress of it all began to get to him, and he could feel a familiar pressure building in his chest. “Relax,” he told himself. “Breathe.” It wasn’t enough.
  • 89 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << The doctor’s funeral was a few days later. No one suspected that such a promising life would be cut short so suddenly by heart disease. Tears and fond memories were shared at his memorial service. Everyone agreed the doctor was a fine man and wondered what would become of his grieving widow and the children now that he was gone. The money ran out a couple months later, and Dr. Baker’s widow was forced to sell their home in the suburbs and move into a small apartment in the city, where steady work was easier to find. Times were hard, and most of their dreams were put on hold. The widow worked two jobs, and her oldest child took a part-time position to help out. The youngest child learned to live without a lot of things and spent hours alone every day waiting for his mom to come home. Years passed. Dr. Baker’s youngest son graduated from high school and wished his father could’ve been there to see him finish with honors. He had a plan to follow in his father’s footsteps and become a doctor himself, but he had no idea where he would get the money to pay for medical school. He kept his father’s old stethoscope on his desk for inspiration. To him, it was a symbol of accomplishment, real proof that dreams become reality with belief, determination, and purposeful action. Thirteen years later, with no advantage other than a burning desire to accomplish his goal, Samuel Baker, Junior, became the second doctor in his family. His achievement was a triumph over many hardships, and he knew that somewhere, somehow, he had made his father very happy.
  • The Sixth Financial Law of Prosperity The Sixth Financial Law of Prosperity is Be Prepared. Maintain insurance, have an emergency fund, keep a will, and prepare for both natural and manmade disasters. There is an element of randomness to life that cannot be controlled, but must be prepared for. Few things in life are certain, and you never know when a twist of fate will throw misfortune your way. Being caught unprepared puts your health, wealth, family, and even your life in jeopardy. There’s an element of chance to life about which you can do very little. Preparedness is the only way to protect what’s important to you. Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. 3. Make More Money Create multiple sources of income and save 80% of this extra money for future investment. 4. Live a Sustainable Lifestyle Avoid the lifestyle trap, and recognize that the things you buy can have unforeseen ownership costs. 5. Help Those In Need Give the gifts of money, time, and forgiveness to the needy. 6. Be Prepared Maintain insurance, have an emergency fund, keep a will, and prepare for both natural and manmade disasters.
  • 91 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Your Emergency Fund Everyone needs an emergency fund. An emergency fund is a cash reserve that can be used for unexpected and unavoidable expenses. What if you lose your job, your car breaks down, the roof starts to leak, or you have a medical emergency? Instead of using a credit card, borrowing money, or not taking care of the problem at all, you can rely on your emergency fund. The amount of your emergency fund and the speed in which you create it will vary by your individual financial circumstances. As you make more money, you must also increase the amount of your emergency fund. Initially, your fund must be the equivalent of one month’s living expenses saved in cash and, eventually, increased to at least a year’s worth of living expenses. Having a year’s worth of cash lying around the house makes a lot of people nervous. Where and how you keep your emergency fund is your choice. However, it’s crucial that your emergency fund is kept safe, you can get to it when needed, and it’s saved in cash and liquid (easily convertible into cash) assets. Start your emergency fund with the money you have saved for investment (The Second and Third Financial Laws). In fact, your emergency fund is so important that you shouldn’t invest or accelerate the repayment of debt until you have saved at least one month’s worth of living expenses. Once you have established your emergency fund, don’t take any investment risks with this money, or spend it on anything but an absolute emergency. Preparedness is the only way to protect what’s important to you.
  • Avoid Major Loss with Insurance Loss is a certainty of life—only the amount and its timing are unpredictable. Major losses can be disastrous to your financial independence, so you must prepare for any catastrophic loss that would be extremely difficult for you to recover from. Do this by using insurance to reduce your financial risk. Approximately 10% of your total income (this is part of your lifestyle expense) should be allocated to purchase different kinds of insurance protection appropriate for your particular situation and stage of life. Your actual allocation could be more or less depending on the amount of money you make and other life circumstances. Here are several types of insurance protections that you should consider: Disability Insurance: Pays your personal expenses for a predetermined period of time in the event you become disabled by serious illness or injury, and can no longer work. Property Insurance: Pays you if you have a loss on your personal property. The most common property insurance policies are homeowners, automobile, and rental. Whether you rent or own your home, you should always have property insurance. Make sure your coverage includes the full replacement value of the things that are most important to you, such as jewelry, firearms, and artwork. Flood Insurance: Pays you if your property is damaged or destroyed by flood. Flood insurance is a form of property insurance, but most property insurance policies exclude flood insurance. If you live in an area susceptible to flooding, you may have to purchase this type of coverage separately from your other property insurance policies. Never assume your insurance policies cover floods. Always ask your insurance agent if you are covered for flooding, and get their answer in writing. Life Insurance: Pays your family and other named person(s) a preset amount of money if you die. Anyone with a family should have life insurance. Thinking about
  • 93 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << your own death isn’t any fun, but at least you’ll know your loved ones will be taken care of when you are dead and pushing daisies. One clever wealth strategy is to keep enough life insurance coverage to pay for all of the estate taxes (often called the government “Death Tax”) charged on your property when you die so your property essentially transfers to your heir(s) tax-free. Talk to your attorney and tax advisor for more details about this type of strategy. Medical Insurance: Pays a portion of your medical expenses if you are sick or injured and need medical care. You should consider coverage for both your physical health, long-term care (medical and non-medical expenses resulting from chronic illness, injury, and old age), and dental. Personal Liability “Umbrella” Insurance: Helps protect you from liability claims made against you by others for harm done to them and their property. This type of insurance is important because a lawsuit could be financially devastating and force you into bankruptcy. Pet Bite “Rider” Insurance: If you are a pet owner, make sure your insurance policy covers you in the event your pet decides to bite your local postman, houseguest, or the creepy neighbor kid next door. If you’re not covered, you must add a “rider,” or add-on, to your current policy because you never know when Spot, the family’s mild-mannered pet, will have a bad day and get you into a lawsuit! Insurance can be expensive. If you can’t afford the insurance coverage you need, consider having a high deductible on your policies. High deductibles tend to save you money by lowering the cost of the insurance coverage, but raise your out-of-pocket costs should you need to file a claim. Example: The insurance premium for $0 annual deductible “deluxe” medical insurance policy for a family of two is $1,200 per month. That same policy with a $10,000 annual deductible is $300 per month. A high
  • deductible saves you $900 per month, or $10,800 per year. This is a better deal if you don’t get sick a lot. Make sure you have enough money in your savings or emergency fund to cover your deductible in the event you need to file a claim against your policy. Always work with a professional insurance agent. Make sure you talk to two or more experienced, reputable insurance agents before you buy any insurance product. A good agent will be a tremendous help in determining the coverage you need and customizing policies to fit your budget. Don’t forget to check your agent’s references, and the ratings on the insurance company that will be providing your coverage. Good Advice: Always buy insurance coverage through an experienced, licensed, reputable insurance agent. Buying discount insurance coverage directly over the Internet is probably the best way to get cheated. Insurance policies are complex, and contain many legal nuances the average person won’t understand. Many people have purchased “cheaper” coverage only to have their legitimate claims denied by their insurer. When it comes to insurance, always work with a professional agent, and never switch from a fiscally sound and reputable insurance company to a discount insurance carrier just to save a few dollars.
  • 95 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << When You are Dead or Mentally Gone Most people die without a will, and they make no provisions for their long-term care if they were to become mentally or physically incapacitated. Many falsely believe that their property will automatically go to a family member or trusted friend, and that decisions for their long-term care will be made by close family members too. Without a written will, however, anything can be challenged and disputed by others in court. Sooner or later we all must die. Morbid? Definitely. However, if you would like to leave this world with a little peace of mind, properly plan your estate. If you were to die or become incapacitated, do you know with one hundred percent certainty the answers to these questions? 1) Who gets your property? 2) What three people (in ranking order) would you like to become the legal guardian of your children? Do these candidates have enough resources to properly take care of your children? 3) If you could no longer make your own medical decisions, what type of care would you want? Who do you want making these decisions for you? 4) If you could no longer make your own financial decisions, what three people (in ranking order) would you trust to manage your finances? Would these candidates keep your best financial interests in mind? Every adult should have a legal will that clearly states who gets their property and cares for their children. The will should also contain provisions for your long-term financial and medical care in the event that you become
  • incapacitated. Consult with an attorney who specializes in estate planning to determine what would work best for you and to prepare a proper will. When Disaster Strikes The Sixth Financial Law of Prosperity is more than a safeguard for your financial wealth; it’s a mandate to minimize the effects of outside influences on your health and safety. There is no point achieving your goals only to lose your life in some foreseeable cataclysm that caught you unprepared. We are under constant threat from both natural and manmade disasters. Everyone should be prepared for two emergency situations: fleeing your home with very little notice and temporarily surviving in your home with no access to outside services. No matter where you live, you are vulnerable to earthquakes, floods, storms, wildfires, mudslides, pandemics or some other form of disaster that could change your life in an instant. Here are some of the more infamous natural disasters that have affected others: 1) In December 2004, an undersea earthquake caused a major tsunami to crash into landmasses bordering the Indian Ocean. Over 200,000 people died. It took weeks to effectively mount an international relief effort, and hundreds of thousands of people were left homeless. 2) In August 2005, Hurricane Katrina slammed into Louisiana. By the time the storm had passed and authorities could rescue all of the trapped and stranded people, approximately 1,800 human lives had been lost. It took weeks to effectively provide relief services to the entire affected area and thousands of people were left homeless.
  • 97 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << 3) In May 2007, an F5 tornado killed 10 people and destroyed the city of Greensburg, Kansas. Relief services were onsite almost immediately, but many people were left homeless and had few resources to fall back on. 4) In January 2010, a massive earthquake struck Haiti, killing approximately 200,000 people. It took weeks to mount an international relief effort, and hundreds of thousands of people were left homeless. If Mother Nature wasn’t bad enough, people also lend their own stupidity to the fray. The case for future manmade disasters is strongly rooted in a rich history of industrial accidents, social and civil unrest, economic collapses, depressions, wars, armed conflicts, genocide, terrorism, revolution, liberations, and other euphemisms used to describe mankind’s destruction of life, the environment, and property. The sheer number and scope of manmade disasters is absolutely staggering. Some infamous examples are: 1) The Great Depression of the 1930s was caused by bank and investor greed, but prolonged by the poor economic policies of the U.S. government and Federal Reserve. Tens of millions of people were plunged into poverty for more than a decade. Many who gambled on Wall Street went broke. Hunger and hopelessness were widespread. 2) Adolph Hitler rose to power in 1933 by riding a wave of German social and economic discontent. He placed the blame for the country’s woes on the international and Jewish communities, and he promised that he would do something about it. People who were targeted for persecution and fled, survived with their lives; those that stayed, perished. By the time Hitler was stopped, he had plunged the world into war, murdered more than 5 million people, and displaced millions more. 3) In 1945, the United States, in an effort to force an end to the war with Japan, dropped two nuclear bombs, one each on Hiroshima and Nagasaki, killing
  • approximately 200,000 people. Radioactive material was blown into the stratosphere where it was carried worldwide. Many people living on the perimeter of the blast zones were forced to flee their homes. 4) In 1984, an explosion at a Union Carbide chemical plant in Bhopal, India, sent a plume of lethal chemicals into the air. An estimated 15,000 people died and another 550,000 were injured. 5) In 1986, an explosion at the Chernobyl nuclear power plant sent clouds of radioactive material across Europe, Russia, and into the stratosphere, where it was carried worldwide. Hundreds of thousands of people were affected by radiation and approximately 4,000 died. You must prepare for any natural disaster common to your location, and anticipate what you would do for different manmade disasters. Anyone who’s been in a prolonged emergency situation, like a blizzard or severe storm, knows that the first thing to disappear from the shelves of local stores is food, batteries, and bottled water. The degree of your preparedness will vary by the anticipated emergency. However, two key things you should have on your preparation list are at least a 30-day stockpile of food, including any medications you may need, water, and a “Gotta-Go” bag containing three days worth of necessities, packed and easily accessible just in case you are forced to flee your home. Also, keep insurance information, important medical records, and financial records in a place where you can quickly find them. Additionally, a portion of your wealth should be portable and readily accessible in case there’s no electricity, Internet service or working ATM near you. Cash along with gold and silver coins make an excellent choice. How prepared are you for a disaster? Can you flee your home with only five minutes notice, without access to your credit cards and bank account, and survive comfortably for three days living outside? Can you turn off the electricity, water, and gas to your home and shelter-in-place for a week without going outside? Try it, and you will discover how prepared you really are.
  • 99 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Many people consider this type of preparation to be extreme. However, history has proven time and again that disasters do happen. The Ten Financial Laws of Prosperity are about creating a lifetime of financial independence. There is no point achieving your goals only to let some sort of disaster destroy everything you’ve worked so hard for and prematurely take your life. The effect of what you prepare for can be minimized; the effects of what you don’t prepare for can be catastrophic. Both natural and manmade disasters can strike anywhere at any time. Be prepared. The effect of what you prepare for can be minimized; the effects of what you don’t prepare for can be catastrophic.
  • Share this book! 1) Print out as many copies as you like (yes, it’s 200 pages). 2) Email this PDF to your friends. –or– 3) Post this PDF on your website, facebook, and BLOG. –or– 4) Email a link to the PDF download www.BeRichBook.com Experience this book differently. Download the AUDIO BOOK from www.BeRichBook.com
  • 101 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << CHAPTER 7: FINANCIAL SLAVERY The fastest way to get out of debt is to make more money, and spend less than you make. Robert worked as a shift supervisor at an automobile parts manufacturing company in Detroit, Michigan. The position afforded him a good living and great benefits. He had been with the company for a little over twenty-one years and was a model employee. Robert had always worked hard for what he had in his life. He was a family man with a wife and three kids. He played it safe when it came to his personal finances. He saved his money and never really liked having debt. Robert, however, believed large purchases required the use of debt and that using credit cards was OK as long as he eventually paid them off. So he borrowed money to buy new cars, a boat, family vacations, and his house, weighing each major purchase against his ability to make his monthly payments. One day, while sitting in the company’s lunchroom, Robert watched a story on the local TV news about the national economy. Banks were no longer making loans, credit was scarce, and the number of people dealing with a job loss was growing at an astronomical rate. These troubles seemed a world away to Robert, but he still gave silent thanks for his employment and returned to work. It wasn’t long before the worsening economy affected Robert’s company. People stopped buying cars, and most of their manufacturing lines came to a halt. Half
  • of the company’s workforce was let go. Robert survived the first round of cuts by sacrificing some work hours and taking a reduction in pay. To make ends meet, he started to rely on his credit cards and dipped heavily into his savings to support his family. He even took a part-time job, but his financial problems only grew. A few months passed, and the company he had spent years of his life working for decided to move the manufacturing portion of its business overseas where labor costs were much less. They closed their Detroit plant and filed bankruptcy, cheating employees of promised benefits, terminating retirees’ pensions, and nullifying union agreements. Robert joined millions of others who were unemployed with a family to feed and bills to pay. Robert was under a tremendous amount of financial pressure, and it was hard for him to think about anything else. “How is this fair?” he wondered. “I’m a good person and a hard worker—this isn’t supposed to happen to me.” Things only got worse for Robert. He and his wife bickered frequently about their finances while the telephone rang constantly with bill collectors demanding payment. Past-due notices turned into shutoff notices and only the essentials got paid. He could no longer sleep. At night, he would sneak out of bed to hide in the bathroom and cry. He would jump at the sound of a car door slamming outside his house, and he hid from the mailman who always seemed to deliver bad news. Robert was seriously depressed. The threats, demands, and the legal bullying from the debt collectors were too much. He was willing to give everything away to stop the intimidation and mental anguish. Robert filed for bankruptcy to end the harassment. The courts now decided what debts would be paid and Robert had to start over again financially.
  • 103 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Robert realized too late that debt is a financial trap. It can make a person feel like a caged wild animal, desperate for freedom but helplessly locked behind steel bars. It destroys peace of mind, creates anxiety, and hurts personal relationships. It taxes your health and robs from your quality of life. Debt creeps up on you—innocent purchases made today can grow into mountains of interest and fees tomorrow. Debt is a threat to your financial independence and must be avoided. Robert finally recognized that in order to get what he wanted from life, he had to create it for himself. He had allowed his financial security to become dependent on the promises of others. When those promises were broken, his entire life crumbled. Unfortunately, many people find themselves in the same financial trap as Robert. They don’t realize, until it’s too late, that promises can be broken, and a lifetime of financial security can only be achieved through self- reliance. The Seventh Financial Law of Prosperity The Seventh Financial Law of Prosperity is Live Debt Free. Avoid debt in your personal financial life and pay cash for everything. If you are in debt, try to allocate 20% or more of your total income toward paying off existing debt. Debt is a claim against your future income and property. It’s financial enslavement because both you and your money are working for someone else. It makes everything you buy more expensive. If you are currently in debt, you need to make immediate adjustments to your lifestyle spending. This could be as simple as eliminating financial obligations and allocating more of your income toward paying off existing debt, or it could require you to make
  • sweeping changes in your spending habits. Either way, overcoming debt requires personal sacrifice, but it will ultimately yield your financial freedom. Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. 3. Make More Money Create multiple sources of income and save 80% of this extra money for future investment. 4. Live a Sustainable Lifestyle Avoid the lifestyle trap, and recognize that the things you buy can have unforeseen ownership costs. 5. Help Those In Need Give the gifts of money, time, and forgiveness to the needy. 6. Be Prepared Maintain insurance, have an emergency fund, keep a will, and prepare for both natural and manmade disasters. 7. Live Debt Free Buy with cash. Use 20% or more of total income to pay off debts. Start Living Debt Free A life without debt is one of the greatest gifts you can give yourself. It’s freedom! All debt has a repayment risk and can severely hinder your progress toward financial independence. If you have a debt problem, you are living out of balance with The Ten Financial Laws of Prosperity. The best way to kick a debt addiction is to just do it. Follow these four simple steps to start living debt free today:
  • 105 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Step 1: Personally resolve to add no more debt, starting right now. Step 2: Cut up your credit cards, and become your own personal banker. Use a debit card for emergencies only. You might think it impossible to live without credit cards, but those cards represent the mental wall separating you from living with the burden of debt and living debt free. Step 3: Pay cash for everything. As your money disappears from your wallet, you will be reminded to manage your spending. When you run out of cash, you have reached your spending limit. If you go hungry for a few days, you will learn very quickly how to budget your money. Step 4: Accelerate the process of debt repayment. Negotiate lower interest rates with your creditors and seek third-party help if necessary. Research this subject further by reading a few books on debt reduction and taking a class or two. Credit In Our Society Is Like Heroin To a Junkie It’s amazing how many people actually believe credit, or debt, and credit scores are important. The sheer number of people who have been conditioned to believe their credit score defines who they are and that it really means something is staggering. This conditioning is so strong that people can get deeply offended when they think their credit has been tainted by the least little thing. The belief that credit score and the amount of credit one possesses are what determines a person’s value to society is a lie. Credit reporting and credit, or debt, are tools used by “Big Business” to maximize the amount of money that they can extract from the poorer majority of society. Debt is deliberately created to keep people buying and paying interest
  • on things that they normally would not have purchased once they were out of cash money. Interest is the extra amount you pay to borrow money and makes the things you buy more expensive. In other words, debt is intentionally designed to keep you spending beyond your means, working to pay your creditors, and poor—forever. Billions of dollars are spent on advertising to get you to identify with and use credit. Advertisers tell us that anybody who is somebody uses credit and so should you. After all, credit is important and, when you use it, you are important, too. Psychologically, this is a very powerful message and a great way to control you. Oops! I just let the cat-out-of-the-bag. Yes, you have been conditioned from an early age to accept and identify with credit. If advertisers have done their job properly, you will even defend your need for credit. Still have your doubts? Tell me then, “What’s in your wallet?” Most people automatically answer, “Capital One Visa”. Credit in our society is like heroin to a junkie—we’ve “gotta” have our fix or we go crazy. As soon as our “dealer,” or creditor, threatens to cut us off, we panic for fear of going into spending withdrawal. The depth of this conditioning on the consumer psyche is tremendous. Big Business can even use credit reporting as its own private justice system to bully a credit-addicted populace into obedience. Many people will do almost anything to protect their credit report. If you are obeying The Ten Financial Laws of Prosperity, however, concerns over credit reports and scores begin to fade as your wealth increases and your debts are eliminated. The financially independent, and those following The Ten Financial Laws of Prosperity, don’t really care about credit. I realized this when I went into my bank and asked them to reverse a series of low-balance service charges imposed on an account I was trying to close. The bank had unfairly overdrawn the account with their fees and penalties, and wanted me to pay. The bank manager told me she couldn’t waive the charges because it was against
  • 107 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << bank policy. I asked what would happen if I didn’t pay the charges. She informed me with a smug smile that it would reflect negatively on my credit report. I pondered this for a few moments, then told her those consequences were acceptable. The bank manager was shocked because I wouldn’t be bullied by her threat. Credit reports no longer have any power over me because I pay cash for everything and refuse to borrow money. What power do they hold over you? Break free of the credit report hypnosis. Think differently. Credit and credit reporting are devices that encourage and enable people to live beyond their means. Loans, payments, “easy payments,” “pay later,” “same as cash,” layaway, and advances all mean the same thing—debt. And debt is financial slavery because you are working to pay someone else. You don’t need credit to buy things—you need cash. When your cash runs out, you are done buying. If you need to buy something expensive, save your money first and then buy it. Anyone with debt can reach a tipping point where they owe more than what they can repay. And like a house built from playing cards, everything comes tumbling down in ruin. There’s absolutely nothing in this world that you can buy with credit that a stack of cash can’t buy for less. If you aspire to Live Debt Free, does it really matter what your credit score is? Is the instant gratification of obtaining something now with borrowed money, rather than later with cash, really worth the extra cost? The irony of incorporating The Ten Financial Laws of Prosperity into your life is that once you do, your credit report and score improve dramatically, and Big Business will practically throw credit at you. Resist the temptation, because sheep get fleeced and it’s time to leave the flock. Big Business has spent a lot of money trying to condition you to accept and identify with credit. Do you believe your credit score defines you? Does your credit score make you better than others? Do you believe credit is an important part of your life? Some people are very defensive of their need for credit and can
  • make terrific arguments to support their position (home buying is the most common objection and this topic is covered extensively in Chapter Ten, so keep reading). Listen to what I am really saying. Living debt free does not mean you have to live credit free. You can have all the credit you want, just avoid the debt tsunami that could come from its use. This is a very important distinction, because anyone using credit to buy goods and services that doesn’t have the ability to immediately pay their debt in cash is living beyond his or her means. Think about it. Another Way to Look at Debt It can be difficult to move from the instant gratification of buying something on credit and racking up debt, to the delayed rewards of paying in cash. Often, it’s helpful to look at debt from another perspective to understand the benefits of buying something only when you have the cash to pay for it. Example: Let’s say you are interested in a new mountain bike that costs $500. You could buy it now using a credit card, or you could wait to pay for it with cash. You decide to pay for it with a credit card, and you are charged $200 in interest by your credit card company before you pay off the debt. Using credit increased the cost of the bike from $500 to $700. If you work at a job making $15 per hour after taxes, it would take you 46 working hours to pay for your bicycle. Alternatively, had you waited to buy your bicycle with cash, you would have worked just 33 hours. In this example, paying for the bike in cash saved you from working thirteen extra hours for your credit card company. When you pay with cash, your money’s purchasing power is working for you. If you use credit, both you and your money are working for someone else.
  • 109 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Negotiate Your Debt If you are heavily in debt, you may want to consider negotiating with your creditors to reduce your principal balances and interest rates. Research this subject and consider talking to a credit counselor, nonprofit debt-consolidation company, or your legal advisor. In many cases, your debt can be dramatically reduced, saving you years of working to repay it. Don’t feel guilty, ashamed, or embarrassed for attempting to negotiate your debt. It’s not a question of honor, ethics, morals, or pride if you have a legitimate problem and you are trying to solve that problem through negotiation—it’s only business. Every good businessperson understands the concept of “counterparty risk,” better known as the chance that someone involved in a transaction or agreement cannot uphold their end of the deal. Maybe it’s time for you to think like a good business person when it comes to your personal finances. If you have a debt problem, you must immediately educate yourself, get help, and thoroughly understand your options. One last thing: good business practices don’t include lying, fraud or misrepresentation, because any short-term gain from these activities will have long-term negative consequences in your life. The repayment of all debt is negotiable—you just may not like the final terms. How To Eliminate Your Debts Develop a strategy to eliminate your debts, but keep in mind that all debt should not be treated equal. Some debts will cost you more money than others. Here are three good ways to quickly pay off debt:
  • 1) Repay your debt faster than what your creditor expects. 2) Negotiate a reduction in your debt and interest rate. 3) A combination of the above. You must intelligently employ a strategy to repay your debt. Pay at least 20% of your total income toward your existing debts. This payment is part of your lifestyle expense until you are debt free. When paying off multiple debts, always pay more money to the debt with the highest interest rate first because the higher the interest rate, the greater amount of money you pay to that debt over time. Repaying debts with higher interest rates faster than those with lower interest rates saves you money and allows you to repay all of your debts in less time. Example: You make $3,000 per month from your primary job and have a car loan and a credit card bill that must be paid off. You have $600 per month, or 20% of your income, that can go toward this goal. Your car loan has a balance of $4,000 at 6% interest per year with a monthly payment of $290. Your credit card has a balance of $7,500 at 21% interest per year and a minimum monthly payment of $206. After paying the combined minimum payments of $496 for both the car and credit card, you have $104 remaining in your budget of $600. The extra $104 should be used to repay your credit card because it has the highest interest rate. Paying the credit card’s minimum payment, plus an extra $104 every month, will save you over $10,000 in interest and completely pay off this debt in 32 months. Once your credit card is paid off, apply the $310 (remember, this is the credit card’s $206 minimum payment plus the extra $104) you were paying on the credit card toward your car loan. Pay the $290 minimum monthly payment on the car loan plus the old credit card payment of $310 for a combined payment of $600.
  • 111 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Repeat this process until all your debts are paid. Consider accelerating the repayment of your debt by using the money you save for investment. You may recall reading how the money you save for investment (The Second and Third Financial Laws of Prosperity) should only be used for investments, but being saddled with debt makes it almost impossible to reach your long-term financial goals. Using the money you have saved in this manner can be considered an investment in your financial future. In order to make your financial dreams a reality you must tear down the debt barriers that prevent you from reaching your goal and keep you in a state of servitude. Example: You take home $3,000 per month from your primary job. Under normal circumstances, you should use $600 per month, or 20%, to pay off debt and save 10%, or $300, for future investment. In order to accelerate the repayment of debt, however, you could combine those amounts to use 30% of your income, or $900, to pay off debt. Your credit card has a balance of $7,500 at 21% interest annually, and a minimum payment of $206. If you only made the minimum payment, it would take over 26 years to repay, and you will have paid $12,500 in interest. By increasing the payment from $206 to $900, you will repay the debt in 10 months and will have paid less than $700 in interest. Before you repay any debt, make sure you understand the terms under which you borrowed the money. Some debts can’t be repaid faster than what was first agreed to when you initially borrowed the money. If you have any doubts and questions about your debts, seek professional advice.
  • If you are in debt, both you and your money are working for someone else. Resolve to set yourself free.
  • 113 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << CHAPTER 8: THE ART OF MAKING MONEY Money multiplies under the right conditions and disappears with others. Again, it will be like a man going on a long journey, who called his servants and entrusted his property to them. To one he gave five talents of money [bags of gold], to another two talents, and to another one talent, each according to his ability. Then he went on his journey. The man who received the five talents went at once and put his money to work and gained five more. So also, the one with the two talents gained two more. But the servant who received one talent went off, dug a hole in the ground and hid his master's money. After a long time the master of those servants returned and settled accounts with them. The man who had received five talents of money brought another five. ‘Master,’ he said, ‘you entrusted me with five talents. See, I have gained five more.’ His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master's happiness!’ The man with the two talents of money also came. ‘Master,’ he said, ‘you entrusted me with two talents. See, I have gained two
  • more.’ His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master's happiness!’ And then the man who had received the one talent of money came. ‘Master,’ he said, ‘I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed. So I was afraid and went out and hid your money in the ground. See, here is what belongs to you.’ His master replied, ‘You wicked, lazy servant! So, you knew that I harvest where I have not sown and gather where I have not scattered seed? Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest. Take the talent from him and give it to the one who has the ten talents. For everyone who has will be given more and will have an abundance. Whoever does not have, even what he has will be taken from him. And throw that worthless servant outside into the darkness where there will be weeping and gnashing of teeth.’; … (Holy Bible, Matthew 25:14-30 NIV) The Eighth Financial Law of Prosperity The Eighth Financial Law of Prosperity is Make Money Work for You. Your money must always be working for you by earning a return and producing an income. Invest your money wisely so that the total amount of money you have grows exponentially over time.
  • 115 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Far too many people work for their money, trading their limited time for a meager paycheck that supports their lifestyle. To be financially independent, however, your money must work for you by producing the income required to support your lifestyle and, eventually, eliminating your need to work. You must save and invest a portion of everything you earn until you reach the point where the income received from your investments supports your lifestyle, and the value of those investments continues to grow. All investments carry an element of risk that must be both managed and rewarded with an appropriate return. Investing for future price appreciation (increase in value) alone is similar to gambling. For example, your investment goes up in value, you win, and if it drops, you lose. Investing for a combination of both price appreciation and income gives you some protection, because the money you invested produces more money, also known as “cash flow,”
  • separately from the value of the investment. Therefore, if the value of the investment drops, you would still receive the income, or cash flow, from the investment. Money never sits idle; it’s either creating more money or losing value. Understand what your money is invested in; make sure it’s generating an acceptable return and is reinvested for exponential growth, a process known as “compounding.” Your ultimate goal is to have a series of tangible investments that produce an income large enough to completely support your lifestyle while the value of those investments and income produced continues to grow over time. Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. 3. Make More Money Create multiple sources of income and save 80% of this extra money for future investment. 4. Live a Sustainable Lifestyle Avoid the lifestyle trap, and recognize that the things you buy can have unforeseen ownership costs. 5. Help Those In Need Give the gifts of money, time, and forgiveness to the needy. 6. Be Prepared Maintain insurance, have an emergency fund, keep a will, and prepare for both natural and manmade disasters. 7. Live Debt Free Buy with cash. Use 20% or more of total income to pay off debts. 8. Make Money Work for You Invest your money wisely so that the total amount of money you have grows exponentially over time.
  • 117 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Inflation- The Hidden Tax It seems reasonable that the value of a dollar today would stay the same as the value of a dollar tomorrow, but that’s not the case. Money, in a modern economy, loses its value over time in a process called “inflation.” With inflation, the amount of money under your mattress stays the same, but it buys less stuff with the passage of time. Time changes money. Inflation is measured by the rising cost of goods and services in an economy. Inflation makes everything you buy more expensive, so the value of your money decreases. A dollar buys four apples today but only three apples tomorrow. A dollar is still a dollar, but in terms of what you get for your money, inflation ate one apple! Inflation is created when a government adds more money to its economy than what’s needed for that economy to function properly. There are a number of ways a government can do this, but the process is generally described as “printing money.” When a government adds money to its economy, it typically does so to fund its own spending. This means the government needs more money than what it has received from its citizens in the form of taxes and has decided to make up the shortage by creating new money. This deliberate act creates inflation and decreases the value of all the money in that economy. Inflation is a hidden government tax paid in the form of rising prices. It disproportionately affects the poor, working class, and people who save but don’t invest wisely. To be rich, you must minimize the effects of inflation on your lifestyle and shelter your money from it. Given that inflation decreases the value of money over time, you must put your money to work earning a return greater than your country’s real inflation rate. This figure would include the price changes of food and energy.
  • Example: If your money is in a bank savings account paying 3% interest per year and the real national inflation rate is 4.5% per year, your money is losing 1.5% of its buying power each year (3% interest rate minus the 4.5% inflation rate equals a 1.5% loss). If, instead, you invested your money at a 4.5% interest rate, you break even and your money retains its value. Breaking even on your investments isn’t a path to riches. In this example, you could only hope to grow your money if you invested it at a rate higher than the 4.5% inflation rate. Money is made or lost with time. Your money is working for you only if it’s invested at a rate of return greater than the real inflation rate reported in your country during the same period of time your money was invested. Learn what the real inflation rate is in your country and invest accordingly. “There are three kinds of lies: lies, damned lies and statistics.” —Mark Twain (1835-1910) Two Mules Teach the Art of Making Money It was early morning in the high desert region of New Mexico. The sun was starting to peek above the horizon; its golden rays lit up a magnificent sky filled with purple-hued clouds that floated toward the Sangre de Cristo Mountains. The fall air was crisp, and daybreak chased away the last silvery stains of frost left on the ground from the cold night before. An old wooden wagon creaked and groaned as a pair of dusty mules pulled it toward a distant pasture, part of a beautiful 2,584-acre cattle ranch. Driving the wagon was a weathered ranch hand named Joseph, who quietly hummed to
  • 119 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << himself as the ranch owner and his wealthy friends rode in the back, excitedly talking about their morning quail hunt. The subject of the conversation quickly changed, as it does with successful people, to the art of making money; and everyone in the group had something to say. When it was his turn to comment, the rancher crossed his arms and leaned back on the wagon and said, “Well, boys, these two mules are money-making experts.” He paused to let the absurdity of his statement gain the full attention of the group and then broke the silence. “Tell ’em, Joseph.” Joseph smiled from his perch at the front of the wagon and replied in a southern drawl, “Yes, sir-r-r! Listen up, ‘cause I’m gonna have these mules teach you everything you need to know ‘bout making money.” He raised the leather reins high in the air and, with a firm downward shake, popped them over the backs of the mules while shouting, “Giddy-up, Cash and Flow-w-w!” After the group got a good laugh and quieted down, Joseph continued, “Jus’ like this here wagon needs mules to pull it, you’re gonna need cash flow from your investments for them to take you where you wanna go too!” Money must be put to work earning a return and producing an income.
  • The Miracle of Compounding The “Miracle of Compounding” is the process by which your money grows exponentially over time. The amount of growth depends on the length of time your money stays in an investment, the interest rate, and how often interest is calculated. Time changes money, allowing it to multiply with wise investment. Compounding, or exponentially growing your money over time, is a key component in the formula for creating a lifetime of financial independence. Which would you rather have—a million dollars today or one penny doubled every day for 30 days? Give up? Look at the following chart: In this example of compounding, a single penny invested at an interest rate of 100%, calculated daily for 30 days, gives you more than five million three hundred thousand dollars! To be rich, you need to invest your money wisely and get it doubling in the shortest amount of time possible. Different interest rates, or rates of return, will double your money at different speeds. “The Rule of 72” will help you estimate the time it takes to double your money at a given interest rate. To use The Rule of 72, divide the interest rate (expressed without the percent sign) into 72 to get the time period it will take to double your money. For example, an interest rate
  • 121 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << of 12.3% per MONTH will double your money in approximately 5.9 MONTHS (72÷12.3=5.9). An interest rate of 10.5% per YEAR will double your money in about 6.9 YEARS (72÷10.5=6.9). The miracle of compounding is its ability to transform small amounts of money into larger sums over time. To decrease the amount of time needed to double your money, seek investments with higher returns while being mindful that higher returns can have higher risks. Compounding your money through successful investment is critically important to the achievement of your financial goal. Remember, time changes money and when money is wisely invested, it grows exponentially. The Golden Rules of Investing There are many different investments in this world and what might work for you could be totally wrong for someone else. It is beyond the scope of this book to cover every single investment idea that exists today, but there are a set of rules which can help you make better investment decisions. The Golden Rules of Investing are a set of basic investment principles that were developed to assist you with the identification of opportunities and avoid common investment pitfalls. While The Golden Rules of Investing speak to good old-fashioned common sense, they are often ignored, skipped, and forgotten in the quest to make money. Memorize them and post them on your bathroom mirror. One day you will thank me. Rule #1 Learn from others. I was once told that a pioneer was the guy with all of the arrows in his back. He paid a heavy price for his discoveries,
  • profiting handsomely in some instances and losing everything in others. Learn from people who are making money with proven methods before you risk your hard-earned money on the latest craze. Financially educate yourself. Know what you are doing before you do it. A tried-and-true method of making money is better than a sad- but-true story of losing it. Rule #2 Get your timing right. Timing is the difference between making money and losing money in any investment. All investments rise and fall in value. Know where your potential investment stands in relation to its relevant market and business cycle (business cycles risks are discussed in Chapter Nine) before you invest. There’s always a good time and a bad time for making an investment. Rule #3 Never spend your investment principal. Your investment principal is the cash money you use to make an investment. Once an investment matures, you typically get your money back for a period of time before you find another investment. During this period, resist the temptation to spend any of your investment principal on your lifestyle. Remember, your investment principal is the fuel for your personal money machine which will continually produce cash for you once you start it. The more money you invest, the greater your potential cash flows and returns. You can, however, reward yourself and spend 20% of your profits on your lifestyle. The remaining 80% of your profits must be reinvested for the compounding process to work effectively. Rule #4 Invest for appreciation and income (also known as, cash flow). The lifeblood of any successful business and investment is the cash it produces. Buy and cultivate tangible investments that can appreciate in value and create income. Things that produce cash will always have a value. Investing in noncash-producing assets you believe will appreciate in value is speculation. A small amount of speculative
  • 123 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << investing is normal, but keeping tangible investments that produce money at regular intervals is the key to lasting riches. Rule #5 Avoid overconfidence. The confidence you develop from earlier investment successes can lead to carelessness, causing you to skip critical steps in the investment investigation process. It takes true genius to make money in both up and down markets. Stay humble, check your ego at the door, and don’t get sloppy with your due diligence. Rule #6 Know your exit. Plan your exit before you invest. If your investment strategy is to create cash flow and appreciation for two years, then buying a ten year certificate of deposit won’t help you meet your goal, because you get your money back eight years too late. Knowing what factors will trigger your exit from an investment forces you to think about the viability of that investment to meet your financial objectives. Once the parameters for your exit have been established, follow your plan and never be afraid to take a profit or minimize a loss. All investments must come to an end, so write your ending before every beginning. Rule #7 Read everything. What’s in writing is there for a reason. Read and understand the ramifications of everything you agree to and participate in. If you don’t understand what you are reading, don’t agree to it. Rule #8 Get it in writing. Get all of the details (who, what, when, where, why, and how) on paper before you move forward on any investment opportunity. Never rely on verbal agreements, handshake deals, and unclear details because those are the easiest ways to get cheated.
  • Rule #9 Trust must be continually earned. There are plenty of people in this world willing to take advantage of you for your money. Never do business with people of questionable character. Remember, first impressions tend to be correct impressions. Is your inner voice telling you something isn’t right? Listen to your intuition. Check up on and evaluate the performance of your trusted advisors regularly. Always know what your money’s doing, and NEVER place it all under the control of a single person or company. When it comes to your money, trust must be continually earned and never freely given. Rule #10 Maintain control. Never buy and invest in things you can’t control. When you have control, you make the decisions that shape your investment’s future. When someone else makes the decisions, they have control over your investment’s future and, therefore, your money. Rule #11 Stick with what you know. We all develop an investment expertise in something. It might be investing in businesses, stocks, or real estate. Whatever your investment expertise, exploit it to the fullest and avoid jumping from one investment type to the next. When you do invest in something new, start small, do your homework, read books, take classes, and seek professional guidance from someone you can trust until you have achieved mastery of the new investment vehicle. Rule #12 Work with professionals. It’s impossible to be an expert in everything and, sooner or later, you will need outside help. Only work with professionals who are experts in their field. Professionals are knowledgeable, licensed, sought after, teach their trade, write books, and have a loyal following. Having the right professionals on your team increases your probability of success.
  • 125 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Rule #13 Negotiate everything. A little give and take is a natural part of life, so why should investing be any different? Ask for a better deal and don’t automatically give up when someone says no. Rule #14 Do your own homework. Never rely solely on the recommendations, investigations, and research done by other people to determine the viability of any potential investment. Accept nothing as fact unless you have independently verified it. Hire your own experts. Ask lots of questions including my personal favorites: “Who benefits?” and “How could this go wrong?” Once your questions have been answered, you can make the appropriate investment decision. It’s never the questions that you ask that cost you money—it’s the ones you fail to ask that will get you every time! Rule #15 Beware the sword of leverage. Borrowed money, or leverage, is an investment magnifier. It is a tool used to increase the financial returns from an investment. Leverage, or debt, in your investment life is not the same as debt in your personal life, even though it still has its risks. Leverage is a sword that cuts both ways, because it can magnify both investment gains and losses. Positive leverage occurs when the profits made from the investment are greater than the interest paid on the money borrowed. Negative leverage occurs when the interest paid on the money borrowed exceeds the profits made from the investment. Money never sits idle; it’s either creating more money or losing its value.
  • Share this book! 1) Print out as many copies as you like (yes, it’s 200 pages). 2) Email this PDF to your friends. –or– 3) Post this PDF on your website, facebook, and BLOG. –or– 4) Email a link to the PDF download www.BeRichBook.com Experience this book differently. Download the AUDIO BOOK from www.BeRichBook.com
  • 127 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << CHAPTER 9: PROTECT YOUR MONEY Opportunity knocks loudly for a fool with money. “The sun was shining on the sea, Shining with all his might: He did his very best to make The billows smooth and bright— And this was odd, because it was The middle of the night. The moon was shining sulkily, Because she thought the sun Had got no business to be there After the day was done— "It's very rude of him," she said, "To come and spoil the fun!" The sea was wet as wet could be, The sands were dry as dry. You could not see a cloud, because No cloud was in the sky: No birds were flying over head—
  • There were no birds to fly. The Walrus and the Carpenter Were walking close at hand; They wept like anything to see Such quantities of sand: "If this were only cleared away," They said, "it would be grand!" "If seven maids with seven mops Swept it for half a year, Do you suppose," the Walrus said, "That they could get it clear?" "I doubt it," said the Carpenter, And shed a bitter tear. "O Oysters, come and walk with us!" The Walrus did beseech. "A pleasant walk, a pleasant talk, Along the briny beach: We cannot do with more than four, To give a hand to each." The eldest Oyster looked at him. But never a word he said: The eldest Oyster winked his eye, And shook his heavy head— Meaning to say he did not choose
  • 129 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << To leave the oyster-bed. But four young oysters hurried up, All eager for the treat: Their coats were brushed, their faces washed, Their shoes were clean and neat— And this was odd, because, you know, They hadn't any feet. Four other Oysters followed them, And yet another four; And thick and fast they came at last, And more, and more, and more— All hopping through the frothy waves, And scrambling to the shore. The Walrus and the Carpenter Walked on a mile or so, And then they rested on a rock Conveniently low: And all the little Oysters stood And waited in a row. "The time has come," the Walrus said, "To talk of many things: Of shoes—and ships—and sealing-wax— Of cabbages—and kings—
  • And why the sea is boiling hot— And whether pigs have wings." "But wait a bit," the Oysters cried, "Before we have our chat; For some of us are out of breath, And all of us are fat!" "No hurry!" said the Carpenter. They thanked him much for that. "A loaf of bread," the Walrus said, "Is what we chiefly need: Pepper and vinegar besides Are very good indeed— Now if you're ready Oysters dear, We can begin to feed." "But not on us!" the Oysters cried, Turning a little blue, "After such kindness, that would be A dismal thing to do!" "The night is fine," the Walrus said "Do you admire the view? "It was so kind of you to come! And you are very nice!" The Carpenter said nothing but "Cut us another slice:
  • 131 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << I wish you were not quite so deaf— I've had to ask you twice!" "It seems a shame," the Walrus said, "To play them such a trick, After we've brought them out so far, And made them trot so quick!" The Carpenter said nothing but "The butter's spread too thick!" "I weep for you," the Walrus said. "I deeply sympathize." With sobs and tears he sorted out Those of the largest size. Holding his pocket handkerchief Before his streaming eyes. "O Oysters," said the Carpenter. "You've had a pleasant run! Shall we be trotting home again?" But answer came there none— And that was scarcely odd, because They'd eaten every one.” ; … -“Through the Looking-Glass and What Alice Found There” by Lewis Carroll
  • The Ninth Financial Law of Prosperity The Ninth Financial Law of Prosperity is Protect Your Money from Loss. Never risk your money on unwise investments and completely entrust another person with the responsibility to manage it. Decrease your risk of loss by having diversified investments, constantly improving your financial education, gauging your business cycle risks, and working with reputable professionals. Sooner or later, everybody loses money investing. However, wise investors understand and heed the old saying, “the return OF principal is more important than the return ON principal.” All investments have their associated risks. If you don’t fully understand what those risks are, then you’re not ready to invest. You must learn to become a proficient manager of investment risk. You can minimize, but never wholly eliminate risk. Remember, you are responsible for your money’s well-being, because it’s you who must live with the consequences of its loss.
  • 133 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. 3. Make More Money Create multiple sources of income and save 80% of this extra money for future investment. 4. Live a Sustainable Lifestyle Avoid the lifestyle trap, and recognize that the things you buy can have unforeseen ownership costs. 5. Help Those In Need Give the gifts of money, time, and forgiveness to the needy. 6. Be Prepared Maintain insurance, have an emergency fund, keep a will, and prepare for both natural and manmade disasters. 7. Live Debt Free Buy with cash. Use 20% or more of total income to pay off debts. 8. Make Money Work for You Invest your money wisely so that the total amount of money you have grows exponentially over time. 9. Protect Your Money from Loss Never risk your money on unwise investments or completely entrust another person to manage it. Base Hits I was 11-years-old and standing at the edge of a cornfield on Kent Island overlooking the Chesapeake Bay. It was a sweltering summer afternoon, and the neighborhood kids had gathered to play baseball with Mr. Parker, my best friend’s father, who had taken on the dual roles of coach and umpire. Baseball was a very popular pastime for the local kids, but I was secretly embarrassed because I was the only one in my neighborhood who didn’t know how to play.
  • While the other kids skillfully hit the ball and ran bases, I stayed in the outfield. My lack of participation didn’t go unnoticed by Mr. Parker, who in short order, had me in the makeshift batter’s box with a bat in hand, instructing me to keep my eye on the ball and swing when I was ready. The first pitch came whistling by me at chest height, smacking into the catcher’s glove with a resounding thwop! “Strike one!” someone yelled. I stood paralyzed, wondering what had just happened, and the rest of the kids erupted in laughter. “Don’t worry about that one, Danny-boy!” Mr. Parker shouted from his vantage point halfway between home plate and third base. “But you might want to swing the bat next time.” Determined to earn the respect of my friends, I swung at the very next pitch in a hard, arching motion that made me look more like a golfer than a baseball player. I missed the ball by a mile. The uncontrolled awkwardness of my swing spun me around, and I lost my balance and stumbled to the ground. “Strike two!” My friends burst into laughter once again. Mr. Parker was bewildered. He jogged in and pulled me aside for some personal coaching. “What are you doing?” he asked.
  • 135 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << “Well, everyone else was hitting the ball far and high in the air, so I thought I’d fix my swing to do the same,” I explained. “Don’t worry about hitting the ball into the air,” Mr. Parker said, resting his hand on my shoulder. “Your only concern is to hit the ball just enough to get on first base. Base hits are what it’s all about. Hitting fly balls and home runs comes with practice.” Encouraged, I stepped back into the batter’s box and hefted the bat to my shoulder. The pitcher threw the ball in a perfect pitch toward home plate. I swung. The aluminum bat collided with the ball. Ting! The ball leapt from the bat and took one hard bounce into the dirt halfway between the pitcher and me. He scrambled to chase the ball. I ran toward first base making contact with the bag while the rest of the kids cheered for me. “See? What did I tell you?” Mr. Parker shouted to me from across the field. “Now go from base to base until you score, but don’t do anything stupid.” Following those instructions, I soon scored my first run. From that point forward, every time I got up to bat, I kept one thing in mind: Home runs come with practice, but base hits are what it’s all about. As I got older, I realized this simple philosophy was true for many things in life, including the accumulation of wealth. Everyone dreams of hitting a financial home run and making lots of money by taking a big risk; that’s our greed tempting the fool within. Many people find out too late that big risks come with big losses and severe disappointments. Wise investors have learned that base
  • hits, or growing one’s wealth with a series of reasonable investments producing predictable returns, are better than a single risky investment with a high return. Grow your money gradually by building on prior investment successes, and avoid the temptation of a single risky investment. Greed tempts the fool within. The Paradox of Modern Money Most people want money, but many do not understand what money really is and the role it plays in the financial system. Modern money is a paradox—it has value and is worthless at the same time. Its true value comes only from your perception of its worth in the system where it’s exchanged for goods and services. Your country’s financial system needs you to believe your money has value. To understand why, you must realize modern money, called “fiat money,” is merely a mechanism of exchange and a unit of accounting represented by government controlled currency. Modern money has nothing to do with anything of intrinsic value like gold bars and silver coins. Its value is only a shared belief. As long as you and other people believe your paper money has value, it’s valuable. A currency’s issuing government and central bank control the printing and supply of money. Today, however, commercial banks create and distribute most of the money in our economy through a process called fractional-reserve banking. The paper money in your wallet is government money, and the loan you have on your car and house is bank-created money. Bank money always takes the form of loans and it is regulated by the government and its central bank. The creation process of bank money essentially works like this:
  • 137 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << 1) The government’s central bank creates $1,000 from ink and paper, and then gives this money to Dan. He deposits the $1,000 into his bank. The bank lends $850 to Sam so he can buy a car. The bank reports that they have $1,000 on deposit that Dan can withdraw at any time, and a loan to Sam for $850. The total money in the financial system went from $1,000 to $1,850. 2) Mary sells a car to Sam and deposits the $850 she got from him into a different bank. Mary’s bank then lends $722.50 to Fred so he can buy a boat. This bank reports that they have $850 on deposit that Mary can withdraw at any time, and a loan to Fred for $722.50. The total money in the financial system is now $3,422.50. 3) Michelle sells a boat to Fred and deposits the $722.50 she got from him into a different bank. Michelle’s bank then lends $614.12 to Larry so he can remodel his bathroom. This bank reports that they have $722.50 on deposit that Michelle can withdraw at any time, and a loan to Larry for $614.12. The total money in the financial system has now grown to $4,759.12. Total Deposits Reserve @ 15% Amount Loaned Money SupplyTransaction Depositor 1 Dan $1,000.00 $150.00 $850.00 $1,850.00 2 Mary $850.00 $127.50 $722.50 $3,422.50 3 Michelle $722.50 $108.38 $614.13 $4,759.12 TOTAL $2,572.50 $2,186.62 In the example above, the banks took $1,000 in government money and created an additional $2,186.62 from it in the form of loans, or bank money. And, the total money supply grew to $4,759.12. Debt is money in our modern economy. This lending and money creation will continue until the original $1,000 can’t be
  • split anymore. If Dan, Mary, and Michelle decided to withdraw their money from the bank in the form of paper money, or cash, a bank could borrow the physical money needed to cover the amount of withdrawal from the government’s central bank. Modern money is easily controlled by its issuing government and central bank. The supply of money can be increased, potentially lowering money’s value. The supply could also be decreased, potentially raising its value. In times of financial turmoil, a government can even implement “capital controls” and restrict people from accessing their cash at banks; this protects the financial system, but hurts the people who need their money to live and pay bills. Modern money has its risks. It’s a terrible store of value and a threat to your long-term financial independence. You must learn to protect your wealth from your country’s financial system. Instead of keeping all of your money in cash and on deposit at a bank, diversify into tangible assets with intrinsic value such as quality income-producing real estate, ownership in companies that produce highly sought after commodities, and precious metals like gold and silver. Modern money is a mechanism of exchange and unit of accounting—it has no intrinsic value. If you and others believe that the money you are using has value, then it is valuable. An economy can only function properly if the people participating in that economy believe that their money is worth something. Banks need to multiply the government’s money and distribute it throughout the economy by making loans, while the majority of the population must continually borrow, spend, and pay interest on that money. If the government, banks, and general population fail to do their part, the economy suffers. This has created a system of financial servitude from which most people will never escape, and an environment in which you must learn to both navigate and profit.
  • 139 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Business Cycle Risks and Currency Manipulation A government has a tremendous amount of control over its currency, banking system, and economy. In most of the developed world, the money supply, or currency (paper money) used in modern economies, is controlled by the issuing government’s central bank, or monetary authority. Traditionally, a central bank’s role is to oversee a country’s money supply, regulate its commercial banking system, and issue the official government currency. These inherent duties also give a central bank the ability to influence their country’s business cycles, or periods of economic expansion and contraction. When a government and its central bank attempt to influence their country’s business cycle, it can have a dramatic impact on your financial independence. A business cycle is the reoccurring expansion and contraction of an economy. The current state of your country’s economy is important to you, because when things are going well, it’s easier to make money and live. When things are going poorly, it’s easy to lose money and harder to live. Generally, if business is good and jobs are plentiful, the economy is expanding; if businesses are struggling and jobs are hard to find, the economy is contracting. This may also be known as a recession or, depending on the severity of the situation, a depression. It is natural for all economies to have their ups and downs. Central banks and governments alike prefer that their economies expand moderately. Their citizens are happy, businesses thrive, tax revenues increase, and there are plenty of jobs. In short, life is good. However, economies don’t expand forever and, sooner or later, they must undergo a period of contraction. Think of this as an unavoidable cleansing process that clears away inefficiencies, poorly run businesses, misallocation of capital, and malinvestment in an economy so it can begin to expand again. This is very much like weeding and clearing out dead growth from a garden so that new fruits and vegetables can be grown.
  • To control the severity of the inevitable business cycle contraction, central banks and governments use their powers to intervene by doing any number of things from adjusting interest rates to changing policies and creating new laws. When their interventions work, their economies start growing again. However, sometimes this meddling has the opposite effect and can produce harsh economic consequences. In order to financially protect yourself from these consequences, you must learn to recognize and defend against four main business cycle risks: Deflation – Deflation occurs when there is not enough money and credit circulating in a country’s economy for that economy to function properly. People spend less on goods and services, so prices fall. Deflation increases the value of your money so you can buy more with it. Initially, falling prices might seem like a good idea because lower prices benefit the poor, people on fixed incomes, and those who save their money. However, prolonged deflation devastates an economy by killing the demand for goods and services, causing companies to cut jobs, and forcing others out-of-business. When people are unemployed and have no money to spend, lower prices are no comfort. It also becomes harder for people to repay debts which jeopardize the solvency of banks and other moneylenders. This further fuels the deflationary spiral and prolongs a country’s economic woes. Many assets such as real estate, precious metals, and stocks can lose value during periods of deflation and hurt investors. One way to hedge against the effects of deflation is to keep your wealth in paper money. Once deflation has subsided, use your cash to scoop up undervalued assets to make handsome profits once prices increase. High Inflation – Inflation occurs when there is too much money circulating in a country’s economy for that economy to function properly (mild inflation is normal, high inflation is not.) Prices rise, so people are
  • 141 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << forced to spend more on goods and services. Inflation decreases the value of your money so you can buy less with it. Rising prices penalize the poor, people who live on fixed incomes, and those who save their money but don’t invest it wisely. Prolonged high inflation can devastate an economy by eroding the savings and capital needed for future investment in that economy, and destroys the purchasing power of people’s wages. Certain assets like quality stocks, commodities, and precious metals can gain value during periods of high inflation. Protect your wealth from the effects of inflation by putting it to work earning a return greater than the real national inflation rate. Hyperinflation – Hyperinflation occurs when there is too much money circulating in a country’s economy for that economy to function properly. And the people using it lose faith in and reject that money. Hyperinflation rapidly decreases the value of a country’s currency, making it worth significantly less because the prices of goods are skyrocketing higher. People using a failing currency will buy anything to avoid getting stuck with paper money that’s quickly becoming worthless. This increases the demand for goods and sends prices much higher. A meteoric rise in prices penalizes just about everyone, but is hardest on the poor, people on fixed incomes, and those who have diligently saved their money and have no tangible assets. You must learn to protect your financial wealth against hyperinflation. Tangible assets with intrinsic value like gold and silver are a traditional safe haven for investors during times of economic uncertainty.
  • Hyperinflation is rare, but devastating to an economy and, if you are not prepared, your financial independence. Once hyperinflation has subsided, scoop up undervalued assets to make handsome profits when the economy stabilizes. Stagflation – Stagflation is a mixture of the worst characteristics from both inflation and deflation. An economy suffers from poor economic growth, high unemployment, deflation of asset prices, and inflation in the cost of consumer goods. It is caused by a saturation of bad economic policies by both a central bank and its government. Prices on food, energy, and other essentials rise, while prices of certain assets can fall. The poor, people who save, people on fixed incomes, and those who invest money are all penalized. Be both opportunistic and vigilant with your money during periods of stagflation. Governments can also manipulate their currencies directly. They can change the rules under which they honor their currency and pay back their debts. Currency manipulation is a VERY real threat to your financial independence if your wealth is stored in the currency, or paper money, being manipulated. For instance, in 1933 the United States was still trying to emerge from the Great Depression, a period of economic contraction and deflation. In an effort to stimulate the economy using government intervention, President Roosevelt declared private ownership of gold to be illegal, imposing stiff fines and prison time for anyone violating this order. This forced US citizens who had gold, which was legal tender at the time, to exchange their tangible bullion for paper dollars at a rate of $20.67 per ounce. One year later, the US government increased the dollar-to-gold exchange rate to $35 per ounce, which decreased the real value of the dollar against the value of gold by approximately 40%. This deliberate act of manipulation cheated every person who held and got paid in dollars of nearly half of their money’s value. It wasn’t until 1974 that US citizens could once again own gold.
  • 143 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Government manipulation of paper money and business cycle risks pose a significant threat to your long-term financial independence. Modern money is an unreliable store of value because it can be easily controlled by the issuing government. If you want to be rich for life, learn to anticipate and protect your financial wealth from both currency manipulation and the inevitable business cycle risks that you will encounter in life. Remember, people must always satisfy their basic human needs no matter what direction the economic wind is blowing. Educate yourself, be vigilant, and invest accordingly. Modern money is worth only what someone else is willing to give you for it. The Golden Rules of Protection The Golden Rules of Protection are a set of important safety guidelines for investment that will help you identify risks and minimize the loss of money. Much like the Golden Rules of Investment in the previous chapter, the Golden Rules of Protection speak to good old-fashioned common sense, which means that they are typically ignored, skipped and forgotten during the investment process. Memorize these rules and apply them in your daily investment activities. Rule #1 Diversify your wealth. Spread your wealth across different investment categories and develop multiple income streams. If one of your investments becomes impaired or lost, you are protected by having other investments. Separate your investments by placing them into different ownership entities you control like limited-liability companies (LLCs), corporations, and trusts which will help to protect you against third-party claims that may arise from your investment
  • activities. Talk to your favorite attorney, financial advisor, and accountant for more information. Rule #2 Control your fear and greed. The fear of loss and greed for more are curses on sound investment decision-making. Whether you are emotionally determined to make more money from an investment or worried about minimizing a loss, rational judgment becomes clouded and you can fail to use good common sense. Recognize and avoid making investment decisions that are motivated by your fear and greed, as they will only cost you money. Rule #3 Never grow a problem. Take care of small problems before they turn into large ones, because large problems have a way of turning into expensive lessons. Rule #4 Keep a “friends and family policy.” You are not the personal investment banker to your friends and family. Only lend money to friends and family if you consider the loan to be a gift that will never be repaid. Losing a close relationship over money is a steep price to pay for being someone’s temporary financial savior. As Shakespeare said, “Neither a borrower nor a lender be; for loan oft loses both itself and friend.” Rule #5 Give no guarantees. Every investment and business endeavor has the potential to lose money. Never, never, NEVER provide a personal guarantee on anything that will give somebody else a financial claim against you and your property. Investments that require a personal guarantee can cost you your entire investment plus much more. Rule #6 Never go-for-broke. Going for broke often leaves you broke. We have all been inspired by the stories of people who have become fabulously wealthy after they bet everything they had on the hope they would
  • 145 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << strike it rich on a particular investment or company. These are the lucky few, because countless others have lost everything by taking similar gambles. If your money plan involves go-for-broke investing, stop to consider what the poorhouse looks like, because that’s where you’re headed! Rule #7 Avoid the partnership quagmire. Most partnerships are formed when the person with the business idea needs money, lacks the confidence to go it alone, and doesn’t want to work as hard as they should. Partnerships slow the decision-making process and can create tension between participants. This leads to the destruction of the partnership and the potential loss of money. Always remember, if you have at least a 51% interest in a partnership, you are in control. If you have a 50/50 partnership, you have a bureaucracy. If you have a 49% or less interest, you have a job that makes your partner your boss. Rule #8 Never turn a moneymaker into a money loser. Don’t be afraid to take your profits on an investment. What goes up in value also comes down in value. And, more often than not, the difference between profit and loss is timing. There will always be a fine line between profit and greed; define the line, and never let your greed turn a money-making investment into a loser. Rule #9 Cut your losses. Once you begin to lose money in an investment, there’s typically no way to determine if you will continue to lose money or make your money back over time. Once a loss has reached 20% of the value of your investment, do what you must to salvage the remainder of your money to prevent an even greater loss. Don’t let fear, denial, or hope cloud your judgment and compound a loss. Remember, a 50% loss will require a 100% gain to make up.
  • Rule #10 Never rush. Rushing always leads to mistakes. If something seems odd or out of place, or if you think you are getting quickly pushed into something, don’t be afraid to pass on an opportunity. Good deals come along regularly; replacing the money you have lost on a failed investment will take considerably longer. Rule #11 Hedge against loss. A hedge is a separate investment made to protect another investment against a major loss. Think of a hedge as insurance protection for your investments. For example, if you invest your money in the stock market, but are worried about the potential for a market crash, you could hedge your stock investments by buying “puts,” or the right to sell your stock at predetermined prices. If the market crashes and the price of your stocks go down, the value of the puts will rise, offsetting your loss. Alternatively, if you are worried about your government “printing” ridiculous amounts of money and diluting its real value in the economy, you could buy tangible precious metals, such as gold bullion and silver coins. Most investment risks can be hedged with proper planning, but, like an insurance policy, hedges can have a cost. Rule #12 Never play in a rigged game. Casinos exist because the overall odds of winning bets are stacked in their favor. This means more people lose money in a casino than ever win. Putting your money in any opportunity that has an unpredictable outcome and a high probability of loss is gambling, not investing. Never invest in any opportunity that is manipulated, controlled, and subject to the undue influence of another because, like a casino, the odds of you winning are not in your favor. Rule #13 Know your “counterparty risk”. Counterparties are the other participants in a business transaction. Anything you do that involves another person, company, institution, entity, organization, or government has counterparty risk. All business dealings have a
  • 147 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << counterparty that must fulfill certain agreed on obligations as part of the transaction. Your counterparty risk is the chance that the other participant(s) won’t keep their end of the deal. Counterparties can be obvious, like the salesman who is selling you a used car, and not so obvious, like the stock exchange that is facilitating a sale of stock to you at an agreed on price. You automatically anticipate the possibility that the used car salesman might cheat you, but what might surprise you is the possibility that the stock exchange might cheat you, too. Rule #14 Minimize tax. Taxes are a societal reality. Learn to legally delay, minimize, and eliminate the amount of taxes you pay on both your income and investment activities. Your goal is to keep as much of your money working for you as possible. By delaying the payment of tax, you gain the benefit of having a portion of your money compounding and producing even more money for you when it otherwise would have been lost to taxes. For example, you owe $30 tax on $100 you made investing. If you paid the tax today you would have only $70 to reinvest; if you legally deferred the payment of the tax, you could reinvest the entire $100. Talk to a qualified tax advisor, research this subject, and take a class on legally minimizing your taxes. Rule #15 Lend money for tangible collateral. Only lend money when tangible assets are the collateral for your loan. Make sure your loan collateral is worth more than the amount of money that you are lending. Never surrender your right to the collateral until the money you are owed has been fully repaid. When lending money for extended periods of time, consider having a “gold clause” in your lending agreement to protect you against high inflation and currency risks. Make sure all
  • of your lending agreements are in writing and your attorney reviews them prior to any loan being made. A fool and his money are soon parted. —Thomas Tusser (1524-1580)
  • 149 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Chapter 10: HOME SWEET HOME Fewer pleasures are greater than being royalty in your own castle. Thomas stared out his kitchen window at his neighbors as they attempted to back a brand-new motor home into the side yard of their house. “Times must be good,” he said to himself. Much had changed in the old Phoenix neighborhood since he had moved there 13 years ago. Very few of the original homeowners were left; most retired and moved away. Many of the new owners remodeled their houses, trading the 1950s style and charm for a more modern look. As the neighborhood changed, so did the class of people wanting to live there, and they paid prices for homes that seemed outrageous to Thomas only a few years before. Thomas continued to watch his neighbors, Darren and Lydia, as they stopped to bicker with each other. Amused and sensing an opportunity to hassle them, Thomas slipped on a pair of flip-flops and made his way out the front door. “How was I supposed to know you couldn’t see?” Lydia said defensively. “You told me to make sure you didn’t hit the house!” “Come on, babe. What’d you think would happen?” Darren replied.
  • “Howdy, neighbors!” Thomas said, interrupting the argument as he approached. “I came over to tell you that you’re about to back over your lawnmower, but from the looks of it, I think I’m too late.” He chuckled and nodded in the direction of the lawnmower, now crushed under the large black tires of the motor home. “Mr. Comedian, you’re so hilarious.” Darren said. He was still visibly irritated with his wife. “Did you come over here just to annoy me or what?” “Hey, nice camper! Did you guys rob a bank or something?” Thomas said, abruptly changing the subject. “Do you like it?” Lydia chimed in. “We just picked it up from the dealership. We got a great deal refinancing the house, and now we’ve got this little beauty!” Two years passed. Life got harder for most people. Day after day, news agencies reported on the “Great Recession,” the rising ranks of the unemployed, and families losing their homes to foreclosure. Everyone had a story about a friend or loved one who struggled financially. Thomas’s neighborhood underwent another change. Hard times had fallen on many. Some of his friends had been forced into downsizing while others spent their days searching for work. Formerly neat and tidy houses now stood overgrown with weeds and were left in disrepair. Cul-de-sacs that once served as playgrounds for the neighborhood children had fallen silent, and signs advertising, “For Sale Bank Owned” homes were everywhere.
  • 151 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Thomas looked from his kitchen window and saw Darren and Lydia hastily loading a moving truck. It saddened him to see them go, and he didn’t want to miss the opportunity to say goodbye. He put on his shoes and headed out the front door toward them. Lydia saw Thomas coming and walked around to the front of the moving truck to meet him. “We lost the house,” Lydia explained. Tears filled her eyes and ran down her cheeks. “We’ve lost everything” she continued, sobbing. Thomas struggled for the right words, any words that would comfort her, but he had none. “Lydia, I… I don’t know what to say,” he stammered. A rolling rumble followed by a loud bang came from the back of the moving truck as Darren closed and locked the cargo door. A few moments later, he joined them at the front of the truck. “I guess Lydia told you what happened” Darren said, trying to maintain control over the emotion in his voice. “We’ll see you around sometime, OK?” They shook hands and said their goodbyes. Thomas never saw or heard from Darren and Lydia again.
  • The Tenth Financial Law of Prosperity The Tenth Financial Law of Prosperity is Own Your Home. Own your home and enjoy the security and peace of mind this blessing will provide you. If you borrowed money to buy your home, you must intelligently pay off the loan early. Everyone needs shelter. You can rent, own, squat, or live with others, but we all must fulfill this most basic human need. Many people can’t afford to buy a home for cash, so they must borrow the money needed to buy it. Borrowing money to buy a home is consistent with The Ten Financial Laws of Prosperity (and is an exception to the Law: Live Debt Free) because we all need shelter and, depending on an individual’s financial circumstances, must pay a portion of our income to obtain it. The amount of money you spend to own or rent a place to live is part of your lifestyle expenses. Try to spend no more than 30% of your total income on housing and work to own your home free-and-clear. Although it can be done, spending more than 30% of your total income makes it difficult to adhere to the other Financial Laws of Prosperity, and could impede your progress toward financial independence. If you borrowed the money to buy your home, intelligently pay off your loan early. Once you own your home without debt, you can use the portion of your income that was going toward your house payment for other lifestyle expenses or add this money to your savings for future investment. Your home is the castle from which you will rule your financial empire and the cornerstone to your financial independence. Never do anything to risk its loss. Protect your home by maintaining insurance coverage that is adequate and customary for your property’s value and location. Own your home and enjoy the security and peace of mind this blessing will provide.
  • 153 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Summary of the Ten Financial Laws Laws Action 1. You Must Believe Manage your beliefs, intelligently develop a plan, and take purposeful action. 2. Save for The Future Save 10% of your primary income for future investment. 3. Make More Money Create multiple sources of income and save 80% of this extra money for future investment. 4. Live a Sustainable Lifestyle Avoid the lifestyle trap, and recognize that the things you buy can have unforeseen ownership costs. 5. Help Those In Need Give the gifts of money, time, and forgiveness to the needy. 6. Be Prepared Maintain insurance, have an emergency fund, keep a will, and prepare for both natural and manmade disasters. 7. Live Debt Free Buy with cash. Use 20% or more of total income to pay off debts. 8. Make Money Work for You Invest your money wisely so that the total amount of money you have grows exponentially over time. 9. Protect Your Money from Loss Never risk your money on unwise investments or completely entrust another person to manage it. 10. Own Your Home Own your home without debt. Intelligently repay the loan used to buy your home early and never risk its loss.
  • “Intelligently” Pay Off a Home Loan Paying off your home loan early can save you hundreds of thousands of dollars in interest and years of payments. Some financial “experts” can make strong arguments against repaying your home loan early but nothing can trump the simple truth that all debt has a repayment risk. It is this repayment risk, no matter how small, that can cost you your home and potentially send you into a financial tailspin. Having no debt on your home eliminates this risk. You must intelligently work to own your home free-and-clear while being mindful of how the business cycle (discussed in the previous chapter) can impact your decision to prepay your home loan. People who have made a lot of money and then gone broke will tell you they wish that they had paid off their home loan when they had the chance. Learn from their mistakes. You can afford to be aggressive in some areas of your financial life, but it pays to be conservative in others. Obey the Tenth Financial Law of Prosperity and implement a strategy to own your home free-and-clear today. In the United States, most home loans are fully amortizing, meaning a portion of every payment goes toward both the interest and principal until the loan is paid off. During the first years of the loan, most of the payment is applied to the lender’s interest, while a disproportionately smaller amount goes toward the repayment of the amount borrowed. During the final years of the loan, the opposite is true. Example: You borrow $300,000 to buy your home at an 8% interest rate and have a loan that is fully amortized over 30 years. Your payment (principal and interest) is $2,201 every month, or $26,412 per year.
  • 155 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << At the end of the first year, you will: Have paid $23,909 in interest. Have paid only $2,506 toward the loan’s principal. Still owe $297,493. By the end of the 30th year you will: Have paid $492,470 in interest. Have paid $300,000 toward the principal. Have made $792,470 in total payments (on a $300,000 loan). Have successfully repaid your loan. There is no magic to repaying your home loan early. The quicker you repay the amount borrowed, the less you end up paying in interest. Here are some popular techniques that can help you expedite repayment of your loan: Extra Payments – Making extra payments is perhaps the easiest method you can use to pay off your home loan early. Make at least one extra payment to your loan’s principal balance each year, and you will dramatically decrease the amount of interest paid over the life of the loan and the time it takes to pay off the loan. Extra Payment Comparison ($300,000 loan, 8% interest rate with 30-year amortization) Normal Monthly Payments Extra Payment Per Year Monthly Payment: $2,201 Monthly Payment: $2,201 Extra Payment: $2,201/year Total Interest: $492,470 Total Interest: $349,389
  • Years to Pay off: 30 Years to Pay off: 22 INTEREST SAVINGS: $143,081 Biweekly Payments – Payments made every two weeks. To calculate a biweekly payment, divide the normal monthly payment by 2, and then pay that amount every two weeks. This is not the same as twice a month. There are 52 weeks in the year, so you will end up making 26 biweekly payments, which works out to one additional monthly payment per year. Making biweekly payments is basically the same as making one extra payment per year but with a lot more aggravation. Biweekly Payment Comparison ($300,000 loan, 8% interest rate with 30-year amortization) Normal Monthly Payments Biweekly Payments Monthly Payment: $2,201 Biweekly Payment: $1,101 Total Interest: $492,470 Total Interest: $349,472 Years to Pay off: 30 Years to Pay off: 22 INTEREST SAVINGS: $142,998 Refinance: Interest rates vary over time and with economic conditions. If interest rates drop at least 1% below your current loan’s interest rate, you should consider refinancing your loan to the new rate if the fees and new loan terms make financial sense. Once you have your new loan and lower payment, pay the old payment amount on your new loan with the difference going to pay down the principal balance. Interest Rate Reduction Comparison
  • 157 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Old Loan Payments (8% interest rate) New Loan Payments (7% interest rate) Monthly Payment: $2,201 Monthly Payment: $1,996 Extra Payment: $205/month Total Interest: $492,470 Total Interest: $239,995 Years to Pay off: 30 Years to Pay off: 18 INTEREST SAVINGS: $252,475 15-Year Amortization: Changing the amortization period of your loan from 30 years to 15 years or less will dramatically reduce the amount of interest paid and the time it takes to pay off the loan. The drawback to a 15-year amortization period is a higher monthly payment. One way to maintain flexibility in your monthly payment is to keep your 30-year amortized loan but make payments as if you were on a 15-year amortized loan. By doing this, you maintain the ability to pay a lower payment if you happen to be pinched for cash in any particular month. Amortization Period Comparison (8% interest rate) Monthly Payments (30-year amortization) Monthly Payments (15-year amortization) Monthly Payment: $2,201 Monthly Payment: $2,867 Total Interest: $492,470 Total Interest: $216,051.23 Years to Pay off: 30 Years to Pay off: 15 INTEREST SAVINGS: $276,419 Remember, there’s no secret formula to repaying a home loan early. Simply pay back the principal balance owed on the loan sooner than what your lender
  • expects it to be paid. The easiest way to accomplish this is by making extra payments toward the principal balance of your loan every year. If you have multiple loans on your home, pay the additional payments to the loan with the highest interest rate first. Before you prepay on your loan, verify that the loan does not have a prepayment penalty and other restrictions that would prevent you from doing so. All of the extra money you pay needs to go toward your loan’s principal balance. It’s absolutely critical you verify that all payments are applied to your loan correctly. There have been many cases where lenders have failed to properly allocate additional principal payments on the loan, instead electing to prepay interest or hold the payment without applying them at all. Before you prepay any debt, you should consider what future business cycle risks are anticipated in your country’s economy and how those risks could impact you. If, for example, you expect a tremendous amount of inflation (prices increase so the value of your money decreases) it might benefit you to wait and repay your fixed interest rate loans with inflated money. Alternatively, if you expect deflation (prices decrease so the value of your money increases) you might want to save your money and buy a completely new house! If you are not certain about what to do and you see an economic storm coming, maybe the best course of action is to increase your emergency fund and hedge against risk (again, discussed in previous chapters). Most people cannot afford to buy a home for cash so they must use borrowed money. All debt has a repayment risk, no matter how small, that could jeopardize your financial independence. Intelligently pay off your home loan early by repaying the principal you borrowed faster than agreed. Before accelerating the payment of any debt, make sure you can do so without penalty by reading your loan agreement and consider the impact of any business cycle risks that are anticipated in your country’s economy.
  • 159 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Think Correctly About Home Ownership A home is just that—a home. It satisfies your physiological and inescapable human need for shelter. There is a lot of bad thinking being shared in our society about certain financial aspects of homeownership. Below are some of the more popular but incorrect ideas that you may stumble across: Tax Advantage: In the United States, one of the biggest arguments for keeping a loan on a home is the perceived tax advantage received from paying interest to a lender. As of 2012, you can still deduct the interest paid on your home loan from your calculated income that you pay taxes on. If, for example, you are in a 25% tax bracket (this means 25% of everything you earn goes to the government), you must spend one dollar in interest on your home loan to save twenty-five cents on your income taxes. Many people don’t realize it’s much better to save the whole dollar of interest and pay the twenty-five cents in tax on their incomes because they come out ahead by seventy-five cents. Besides, the government can always change its mind about the home loan interest tax deduction and take it away. You should own your home free-and-clear, and let your professional tax advisor worry about your taxes. Your Biggest Asset: Technically, your single-family home can be considered an asset if it has positive equity, meaning that it can be sold for more than what you owe on it. However, to the financially independent, a home is just a home because it does not generate any income. Your personal residence has a high cost of ownership—repairs, taxes, insurance, etc.—and makes a poor long-term investment compared to other opportunities that can give you both cash flow and appreciation. If you consider your home a place to live, and think of an investment as something that pays you an income, you will be one step further from the poorhouse!
  • Home Equity Must be Put to Work: This popular fiction is another way of saying you should keep a loan on your home, and spend your equity on whatever suits your fancy. Never treat your home as a piggybank to be raided whenever the mood strikes you. Your home’s equity is not the same as savings and an emergency fund. Intelligently pay off your home and forget about borrowing against it. When you think correctly about your single-family home you understand that your personal residence is not an investment, tax haven, bargaining chip or piggybank. A home is a place to live. It satisfies your human need for shelter and gives you security and peace of mind. Think correctly about your home and never risk it for a chance to sleep in the streets. Turn Your Home into an “Investment” Turning your home into an investment is a great way to jumpstart the wealth- building process. This technique is especially useful for people just beginning their financial journey or those who have fallen behind in their retirement planning. A home becomes an investment when other people rent a portion, or all of it, from you and the income you receive from that rental covers your ongoing direct costs of ownership. Your goal is to buy and move into your own multi-unit rental property to help you minimize your living expenses by sharing the property’s costs of ownership (loan payments, repairs, taxes, insurance, etc.) with your tenants. You will then pay off the loan used to buy the property as fast as possible. Once you own your rental property free-and-clear, you will have an asset that will pay you a significant monthly income for as long as you own it.
  • 161 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << In the United States, apartment properties with four units or fewer make the best candidates for this technique because they are easy to finance. The entire process is very similar to buying a single-family home and is fairly straightforward. Whatever type of property you buy, make sure you can continue to comfortably afford making the loan payments if most of your tenants move out for some period of time. Example: You want to buy a four-plex. You have a small down payment and your take-home pay is $45,000 per year. You make the choice not to spend more than 30% of your income on housing, so you are limited to a maximum monthly loan payment of $1,150 ($45,000 × 30% = $13,500; $13,500 ÷ 12 months = $1,150 per month). The rents from your soon-to- be-acquired four-plex, however, can also count toward your income, allowing you to get more property for your money. For comparison, let’s pretend that both houses and four-plexes are selling for the same price. Your monthly payments would look like this: House Four-Plex Your take-home income $45,000 $45,000 Max. monthly payment $1,125 $1,125 Purchase price $150,000 $150,000 Loan amount after 10% down $135,000 $135,000 Payment (6% int., 30-yr. fixed) $810 $810 Property taxes & insurance $175 $250 MONTHLY PAYMENT (PITI) $985 $1,060
  • In this example, the payments are a little higher on the four-plex, because the taxes and insurance cost more. The house, however, doesn’t get the financial benefit of collecting rents, which makes a significant difference in how much of your own money you must use to pay back the loan on the property. In other words, if you owned the four-plex, you would use your tenants’ rent money to help repay your property loan. House Four-plex Tenant rents w/vacancy NONE $1,173 Less: operating expenses NONE ($550) Equals: net income NONE $623 Less: monthly loan payment ($985) ($1,060) Equals: your monthly cost $985 $437 If you owned the four-plex, continued to make the entire monthly loan payment of $1,060 from your personal income, and used the $623 the property generated in income as an additional monthly payment to your lender, it would dramatically reduce the amount of time it takes to repay the loan. In this scenario, it would only take 11 years to pay off the loan you used to buy the four-plex (remember, it would still take 30 years to pay off the house). Once the property is paid off, your home has turned into an investment that pays you a monthly income and allows you to live for free. How different would your financial life be if you didn’t have to pay rent or make a house payment? How different would your financial life be if you used this technique multiple times, moving from four-plex to four-plex while using the income from each paid property to pay off the loan on your most recent purchase? Living in your own rental property isn’t for everybody. You will have to put up with your tenants’ idiosyncrasies, sacrifice some privacy, and deal with their
  • 163 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << problems and complaints. You might have to take a property management class or two. You may even have to plunge a few toilets and do many of the repairs yourself to get the numbers to work for you. Is this really so bad? How long would it take you to save the equivalent value of your rental property by simply following the Second Financial Law of Prosperity and saving only 10% of your income? Giving up a traditional home and living in your own rental property with tenants could yield significant long-term financial benefits. Consider this option carefully before you rule it out for the pretty little house with the white picket fence. All self-made millionaires can tell you stories of self-sacrifice. Now that it’s your turn to be rich, what will you sacrifice? Mediocrity is perhaps the greatest social epidemic of our time.
  • * * * We want you to share this book. It took thousands of hours to write. If you enjoyed the read, please repay us for our hard work by sending it to someone else. Thank you for your help! Experience this book differently. Download the AUDIO BOOK from www.BeRichBook.com
  • 165 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << ADDITIONAL RESOURCES FOR YOU 1) Please check our website at www.BeRichBook.com for free updates of this book and other goodies. 2) Children have a hard time understanding certain financial concepts like debt, assets, and expenses. We created a fun and simple card game (ages 8 and up) to teach our kids about the perils of debt and the winning wealth strategy of owning assets. You can get a copy of NET WORTH: The FUN Money Game!™ at www.Amazon.com. Supplies of this game are limited.
  • 167 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << BONUS Chapter: Making Millions in Real Estate A great idea is nothing without a plan and the purposeful action to make it happen. **The bonus chapter is available in the paperback edition and Kindle version only. We had to create two versions of this book to satisfy certain distributor requirements. ** There are literally thousands of ways you can invest your money. I am an advocate for multi-family real estate investment, because you don’t have to be a rocket scientist or need a ton of money to participate. Anyone willing to make the effort to learn about real estate can be successful. Real estate is the only investment category where professional and amateur investors are on a relatively level playing field. There are no expensive database programs, black- box trading systems or elite Wall Street trading firms that can give anyone the upper hand. Every property is unique and must be researched carefully to determine its investment potential. This takes time and patience. These factors can work to your favor because they hinder other investors and make great real estate investments possible. As with any investment, there are risks. But, unlike the stock market, you will never have to worry about a company CEO “cooking the books” to make their quarterly earnings estimates, insider trading, flash crashes, or computer algorithms reducing the value of your property to nothing.
  • From a small multi-unit rental property to large multimillion-dollar apartment communities, there are opportunities available in commercial real estate for all levels of investors and in any market condition. Some of the wealthiest people in the world will tell you that real estate played an important role in making them rich. There’s no right or wrong answer when it comes to determining what type of investment is right for you, because it is, after all, your money. Falling in Love with Real Estate The Keys to Successful Real Estate Investment Eight Ways to Invest in the Same Property 2013-2020 Forecast: The Decade of Economic Decline The Inflation Myth and Real Estate
  • 169 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << All great journeys start with an idea and the determination to do something that has not yet been personally accomplished.
  • Share this book! 1) Print out as many copies as you like (yes, it’s 200 pages). 2) Email this PDF to your friends. –or– 3) Post this PDF on your website, facebook, and BLOG. –or– 4) Email a link to the PDF download www.BeRichBook.com Experience this book differently. Download the AUDIO BOOK from www.BeRichBook.com
  • 171 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com <<
  • 173 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << ACKNOWLEDGEMENTS & RECOMMENDED READING As a man Thinketh, by James Allen This book highlights the importance of proper thinking to achieve your desired outcomes. The quality of your life originates from thought and, therefore, it must be controlled. Rich Dad, Poor Dad, by Robert T. Kiyosaki with Sharon L. Lechter The story of what Robert Kiyosaki learned about money from both his rich Dad and poor Dad. The authors have some wonderful ideas about both assets and liabilities. Robert is also a highly respected financial teacher who conducts workshops and classes around the country. THE LITTLE BOOK of ECONOMICS, by Greg Ip A simple crash course in how economics work in our modern world. A must read for anyone who wants to have a better understanding of economics and the role it plays in our everyday lives.
  • The Richest Man In Babylon, by George S. Clason This timeless classic covers many important life and financial lessons in the form of a parable. It was an inspirational source for many of the Financial Laws of Prosperity and other ideas throughout. Think and Grow Rich, by Napoleon Hill An original study in what it takes to be rich and successful. This was another inspirational source of ideas for this book. Unleashing The Idea Virus, by Seth Godin The idea is the virus. Need I say more? Unlimited Power: The New Science Of Personal Achievement, by Anthony Robbins Mr. Robbins is a masterful coach who can help you to be your best. He is also a sought after teacher and speaker. All of his books, workshops, and courses are highly recommended. Thanks Coach!
  • 175 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << Who Moved My Cheese?, by Spencer Johnson, MD This is a simple story that highlights the importance of adaption, evolution, and change.
  • 177 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com <<
  • 179 >> Get the most recent edition of this book and AUDIO version at www.BeRichBook.com << ABOUT THE AUTHORS Dan Dulin Dan graduated from Arizona State University in 1992 with a Bachelor of Science degree. Following graduation, Dan managed commercial property and served as the Director of Multifamily Operations for Sevo Miller Inc, a sizeable, successful commercial brokerage and property management firm based in Denver, Colorado. During his leadership tenure, he was responsible for the financial operation of over 13,000 multi-family units across eight states, which represented well over a half-billion dollars in investment real estate. Dan joined a national commercial real estate brokerage company in 2000, where he has earned numerous achievement awards. A professional in his field, Dan has authored numerous articles and books on both Commercial Real Estate Technology, and Investments. Additionally, he has taught and lectured thousands of people worldwide via live Internet presentations and seminars. Dan supports and is active in many community outreach and charitable organizations. He is passionate about helping the needy, promoting education, and advocating for a wealthy society.
  • Greg Weiler Greg Weiler is the co-author of Be Rich, The Ten Financial Laws of Prosperity. On graduating from college, he gained management experience in a number of different industries before specializing in finance. His familiarity in fields from teaching to management, aided in the development of this book. Weiler currently lives in Los Angeles and, when he isn’t writing, spends his time hunting for his next real estate opportunity.