Full potential show ep. 8 how to create wealth in your life


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The Full Potential philosophy is meant to help people operate at the best perspective in any given situation. It is about options. It is about empowerment. Empowerment feels good. So does investing life resources in what we truly value. If everyone was living at this level - life would be bliss.

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Full potential show ep. 8 how to create wealth in your life

  1. 1. Full Potential Show Episode 8:How to Create Wealth in Your LifeHello. I’m James Rick. Welcome to the Full Potential Show, your number one, non-boring sourcefor personal development. Today we’re going to talk more about how to create more wealth inyour life. There were two key things that we talked about in the last episode for doing this. Onewas to live a frugal lifestyle…waste not. The second was to actually get a return on investment –leverage. Leverage yourself so that the least amount of effort generates the most amount ofreturn.So today, we’re going to zero in and talk more about how to live a frugal lifestyle and have fundoing it. A lot of times when we think about wasting not, or living below your means, you mightthink, “I’ve got a live like a cheap ass. I need to be a hermit, living in a cave somewhere. Notreally exercising any of the luxuries that any of my family or friends might enjoy and they mightlook down on me because I’m living below my means. Or there’s the cardboard box neighborthat we have, known as our son.” No, you don’t have to live below yourmeans, and you don’t really have to live like a poor person in order tolive a frugal lifestyle. In fact, the way your memory works is that itremembers peak experiences and it remembers low experiences. So,really the key to having fun and doing the frugal lifestyle is to live aconservative lifestyle, but then splurge once in a while. And guess what?When you look back on your life, you’re going to remember all of thesegreat times.Life is going to seem very exciting even though you’re conserving your resources, especially forthe long term which is living frugal is all about. There’s a quote by Samuel Johnson that saysthat, “if everyone were to live frugally, more people would be wealthy and there would be lesspoverty in the world.” Yes, some people may not have an option, you know, in the beginning Full Potential Show Episode 8 Transcript How to Create Wealth in Your Life
  2. 2. especially. But man, if you’re especially struggling right now, you’re trying to make ends meet,you’ve got to find ways to cut down on your lifestyle and still find ways to splurge once in awhile so you don’t feel like you’re just living to die. You know, you’ve got to have some fun inyour life too. So, we’re going to talk about ways to do that in this episode and in the nextepisode.Now that you’ve got some of your army, (remember we talked about capital, or the money thatyou save is turning into capital?) which is your resource for leverage, your power to startapplying effort in the form of capital, instead of hard labor and your hours and your time. So,you’re conserving resources. You’re going to have more capital so you can start applyingleverage and generating more returns and more capital and a bigger army and pretty soon,you’re taking over the world. So, that’s what being frugal is all about- we’re going to take overthe world once we’re real frugal, right?In this episode I want to talk about your housing, your transportation, and your basic living,such as food. And then also, how do you get stuff and how do you still maintain this frugality?So, let’s talk about the house for a minute. You know, so many people invest in the most thattheir credit can possibly allow them. That’s what got this economy in the whole mess in the firstplace - People getting more than they possibly could. Leveraging debt to buy stuff that is nottruly assets, stuff that’s just turned toxic, literally. They call it a toxic asset right now, it is not anasset. A true asset is something that puts money in your pocket, okay? Remember that. Soanything that’s taking money out of your pocket is toxic. It’s something to avoid and I say avoiddebt like the plague, unless you know that debt is immediately going to provide return oninvestment to guarantee. Avoid it like the plague. An interest that’s working against you is theenemy.So if we’re going to set a battle line, the first battle line that we’re going to set is you againstdebt and interest. Now, if you don’t have any debt or interest, you’re in great shape. You couldjust skip this part of it. But if you are in debt and you do have interest working against you rightnow, you’re going to have to tackle this battle line. That means, you’re going to have to findways to get out of debt and get rid of that interest. You’re probably saying to yourself rightnow, “duh! That’s what I’ve been trying to do.” Well, in order to do it, you’re going to have tolook into some other areas and we’re going to talk about that.So, let’s say your house. Let’s say you do have a house and let’s say youhave debt right now. I want you to look around your house right now andsay, “Is this house absolutely necessary?” Because there’s going to be 2key things that I want to drill into your brain and that is: One – there’s ahuge difference between necessary and nice-to-have expenses. That’sreally the key to living a frugal lifestyle - knowing the difference between the nice-to-have,easily justifiable, but unnecessary expense vs. necessary. How do you know what’s necessary? Full Potential Show Episode 8 Transcript How to Create Wealth in Your Life
  3. 3. Necessary is the minimum necessary in order to survive both in your personal life and in yourbusiness and necessary is the also any investment that you know has a pretty good chance ofproducing a return. And “necessary’s” also an investment that you know you’ve researched ishighly unlikely to lose money. Okay, so necessary, defining necessary vs. nice-to-have. It’s sucha critical point, I can tell you so many people that go through years of business school and yearsand years of studying how to do a business fail at that point because they think it’s necessary tohave everything structured in the beginning. It’s necessary to have a nice office, to have a nicedesk, to have nice tools, and everything else, but by the time they get all of what they think wasnecessary (but it was just nice-to-have stuff out of the way),they’ve actually gone out of business. They’ve failed at thenumber one objective, which is to survive. So, necessary iswhatever it takes in order to survive. I want you to just get clearon what that baseline actually looks like, because before this, youmight have said, “Well it’s nice to have this house. It’s nice to havethe car that I have. It’s nice to have these things” - and you’re notwilling to give those up. But when you really start to drill down and say “what is necessary inorder to survive?” you say, “Well, I guess I was living a little higher than I needed to.” In thebeginning, and it’s so important, you only need to sacrifice in the beginning, in fact, yourlifestyle, if you look at it on like a timeline, it may need to take a dip in the beginning, but thatdip is so critical because it’s going to allow you to preserve your capital so that you can finallystart getting some leverage. Once you break through the clouds, it’s like the first million’s thehardest, once you break through the clouds, you’re going to have the resources to continue tokeep on going. Then you can turn around and start getting some of the nicer-to-have stuff. Butit’s when you try to leverage in the beginning and all that debt and interest is working againstyou, that you really hurt yourself.So, let’s go back to the house, which is one of the biggest investments that somebody canmake. It’s not really an investment if you’re buying something that you cannot afford and youhave no guaranteed return. If you think that you’re going to get a return, and you’re hopingthat the price of your house goes up, that’s speculating. The odds of losing money are highwhen you’re speculating. You can do speculating later when you have more money that you canpossibly risk, but in the beginning, it’s so important that we’re only investing in the things thatare necessary and we know have a high chance of return. Let’s start there. Here’s how you’vegot to look at your house situation, whether you’re in debt or you’re not. Start with theminimum. I mean, if you can just get into a place like, if all you are is one person, all you need islike one bedroom, or even a studio. Start with something small and then pay that baby off, sothat you don’t have interest working against you. Then if you do want to get into something bigger, all the money that you would have paid towards a mortgage for 30 years would wind up being 3 times as expensive as what you actually bought when you factor all of the interest in. Let’s say you buy a $200,000 house. By the end of a 30 year loan, it’s like $600,000. But guess what? If Full Potential Show Episode 8 Transcript How to Create Wealth in Your Life
  4. 4. you get into say, a $50,000 hole in the ground. (No, like a condo or something nice, say you getinto something half as much.) You could pay that baby off if you’re stacking your payments overthe next couple of years. By the end of let’s say a 30-year period, you could have bought 10condos. You could either have one if the interest is working against you and you’ve got one paidoff if you paid 600,000 for. Or you’ve got 10, because you’ve also got compound interestworking for you - as you pay off one, you were able to rent it out and buy another one. That’sall returning. So in the end, you actually get even more than the $600,000, because you’ve gotcompound interest (which is something that we’ll talk about in other episodes.) If you’ve neverheard of compound interest, it’s what Einstein said is the most powerful force in the universe.Now, I’m not going to get to broad on all of this stuff. I want to keep it simple.So number one, you’re living environment has to be something that is just totally necessary butnot nice to have. Yes, not nice to have. You’re going to have to sacrifice in the beginning…samething with your car, same thing with your clothes, same thing with your living environment. Iknow that this sounds like a lot of sacrifice, but it’s worth it and you can still get nice stuff.We’re going to talk about how in a minute. So, you’re living environment, your transportation,your living, your food. How do you get this stuff and still enjoy life? How do you not want to killyourself when you’re living so frugal? You can get stuff off of craigslist. Really awesome stuff,really cheap, and guess what? Used stuff can be sold, like people that are moving out of theirhouse, moving out, they’re willing to sell stuff for less. You can still get great stuff used and also,because there may be some urgency to sell it, you can get it at a great discount if you negotiate.So you can still get great stuff. Same thing with your car. You know, if you need to travel, if youneed transportation, you can get access to that transportation so much lower if you get it atslightly used vs. buying new.The house, if you’re saving on your interest, man, I know some people who’vedone the frugal approach, who’ve bought into say a house or a condo forunder $100,000. They’ve got it paid off, and they’re saving like crazy. They’reable to live better and they’re also able to see that their savings is risingbecause they don’t have that interest working against them. In a nutshell, ifyou want to really start building your capital, pay off your biggest stuff and keep the costs low,so that you’re living, your car, and your clothes or whatever else you think is a big expense,start the lowest you possibly can. Get that paid off. Avoid debt like the plague. Interest is theenemy if it’s working against you. Get all that stuff cleared away and wait until you see thesavings start piling up, even if you’re earning an average income.As you’re able to develop this savings, we’re going to talk about how you leverage that in thenext episode, but for now I wanted to get that point down and here’s the other thing, let’s talkabout travel, and other stuff. You know, craigslist is one of those places that you can go. There’salso Ross for used clothes…and for travel, let me tell you about something that I did for travel.In San Diego, they have some places on the beach that go for about $500 a night. I’ve called Full Potential Show Episode 8 Transcript How to Create Wealth in Your Life
  5. 5. around to some different places and I said, “Look, I know that youguys aren’t booked all the time. Tell you what I’ll do when you guysare not booked, I’m going to reserve a night and normally, you’d getnothing from it, but I’m willing to pay...” and it worked out that I wasgoing to pay like 1/10th what they normally rent it out. Normallygoes for $500 a night. I was able to get it for like under $100/ night.You know, still not cheap, but it’s one of those splurge things, right?If I’m saving gobs of money every month on interest because I’m not paying a mortgage oranything, I can afford to go out and splurge a little bit. Guess what? When I do splurge, I get tolive like I’m spending way more, but I’m spending way less because I’ve negotiated a discount.Yes, I did get somebody to agree and said, “You’re right. When it’s vacant, we aren’t making anymoney from it, so yes, we will give you the place when it’s vacant, on short notice, as long asnobody else is renting the place.” So now, I have a few places in San Diego where I can go stayfor $100 night or under if they aren’t renting it out. And it’s kind of cool, it’s a little treat and it’ssomething I get to do to splurge and I’m living right on the beach when I go there. It’sawesome. In the meantime, I’m here in Las Vegas. I’ve got a house that’s paid off here, and Idon’t have a mortgage. In fact, right now, I came back from Jacksonville after I moved withLogan, my girlfriend, back to Las Vegas and I’ve been staying at my mom’s house waiting forrenters to clear out of the other house. You want to talk about frugal, I’m living in my mom’shouse, I’ve got renters in the house in the neighborhood here nearby that are actually payingfor, not even the interest, it’s a surplus. They’re not even paying my mortgage, it s a surplus, sothis is super frugal. Alright.That’s it, living below your means, avoiding debt like the plaque, and interest is the enemy.We’ve got three other obstacles to living a frugal lifestyle that we have kind of talked about inthe last episode and those 3 are: instant gratification, lack of discipline, and ego display.It’s something that I said in the last show, “The ego is the most expensive thing that you’ll everown.” What do I mean by that? If you’ve got to show off, if you’ve got to have people see nicestuff that you don’t actually own, (you don’t own the house until that baby is paid off.) If you’vegot to actually show stuff off, you are just burying yourself with interest. Remember theinterest, the enemy working against you. It’s like the wind resistance and that loan, whatever itis that you’re buying that you can’t possibly afford, is just hurting you in the long run. You’vegot to put your ego in its place and say, “No, I am going to preserve my capital. That’s moreimportant to me than showing off. I don’t care.” Then in the long run, you’re going to havemore capital. Just keep the ego out of the equation. Full Potential Show Episode 8 Transcript How to Create Wealth in Your Life
  6. 6. Here’s how you know if it’s an ego drive or not. If you’re buying it because you care about whatother people are going to say or think when you buy it, it’s probably not so much going to makeyou feel fulfilled or serve you as much as it’s going to make you feel when people comment onhow wonderful, or how great, or how big, or grandiose it is. That’s how you know if it’s an egoexpense. The more that you can avoid those expenses and do things that are actually nice forpeople - you’re not getting recognition for it - that’s going to fulfill you on a spiritual level andthat’s going to be so many more time enriching and so much less expensive. If you really wantto live the frugal lifestyle, you are going to have to put your ego in check.You are going to have to delay gratification. The only way that you’re going to be able to delaygratification is if you’re developing discipline. How do you develop discipline? I’m so glad youasked. We’re going to talk about that in another Full Potential episode.The next show we’re going to talk about is leverage. How do you take that money that you’renow saving, so that you can get the maximum return on investment? So that you can startenjoying life a little more and do a little bit of this splurge that I’ve been talking about. That’scoming up in the next Full Potential episode. I’m James Rick. This is the Full Potential Show;you’re number one, non-boring source for personal development. I hope that I wasn’t too longin this one, because you did get a little bored, I saw you blank out there for a minute . Comeback for the next show. We’re going to make it shorter, more empowering, and more inspiring.I’ll see you next time on the Full Potential Show. I’m James Rick. Subscribe…Sign up, see yousoon.About Full Potential: The Full Potential philosophy is meant to help people operate at the best perspective in any givensituation. It is about options. It is about empowerment. Empowerment feels good. So does investing liferesources in what we truly value. If everyone was living at this level – life would be bliss. To find outmore, visit: www.fullpotential.com.About James Rick: James Rick, also known as “Mr. Full Potential,” is host of the Full Potential Show, Founder of FullPotential Academy, and author of “Unleash Your Full Potential”. James Rick started his first business atthe age of 17, currently employs more than 150 staff around the world, and his businesses havegenerated more than $5 million in revenues over the last 36 months. Full Potential Show Episode 8 Transcript How to Create Wealth in Your Life