The Surprisingly Simple “Secret” to Financial Freedom Most 9 to 5-ers Overlook

Simple “Secret” to Financial Freedom Most 9 to 5-ers Overlook

“I’m ready to get serious about financial freedom!”

I used to be that guy—loudly proclaiming my intentions to build wealth and passive income, with the desire to invest in anything and everything that might grant me the freedom from a life of 9-5 drudgery.

I was working 40-50 hours a week at a steady 9 to 5, earning a nice, median salary. I had an affordable, newish car, a nice apartment, and the best television package money could buy.

It’s a good thing that most people out there are like I was—because I recognize now just how weak and beatable I was. Just how lazy and incompetent. I for sure wasn’t serious. Thank goodness that most people are like I was. Otherwise, financial freedom might be difficult to achieve.

See, as a single person starting from zero, with no dependents and a decent job paying more than $40,000 per year, barring some extreme exception, I should have been building wealth atat least a rate of $10,000, if not $20,000-$30,000, per year—if I were really “serious”.

If I were married with or without kids, then progress towards financial freedom should have been far more rapid. With two people in my household earning serious incomes (and with tax advantages that I can only dream of), we would make our progress that much faster. Again, this is assuming that we truly were “serious” about building wealth.

Now, most people aren’t serious about building wealth, and that’s totally OK. I don’t intend to write for the average person interested in nice cars, fancy hilltop houses, and three meals out a week. I’m not judging them, and financial freedom is not everyone’s goal.

Nope, this article is intended for all the 9 to 5-ers out there, starting from scratch or close to it who really badly want financial freedom. I want to show them that as a fellow 9 to 5-er, there is only one way that truly makes sense for you to get started on your journey to financial freedom.

And you aren’t going to like it.

It’s not by investing or building multiple income streams. It’s a far easier and more common sense approach:

Preserving capital. 

build-wealth

If you stop reading right there, that’s your prerogative. It’s likely that you’ll never, ever have the chance to compete in any serious real estate or business endeavor, and again, that’s totally fine.

Wealth building begins and ends with preservation of capital, and for pretty much all of the people like me out there—those with full-time, demanding, but decently paying jobs—the hard truth is that that first step in the process to escape from a 40-year cubicle life has been and always will come down to preservation of capital. Frugality. Savings. Penny pinching. Whatever you want to call it.

See, when I actually became “serious” about building wealth, I of course realized what everyone else does—that there are three things that all must be applied consistently over the long-term:

  • I must preserve more of my current income.
  • I must seek greater and additional sources of income.
  • I must intelligently apply preserved capital to investments capable of producing outsized returns.

Almost anyone thinking about building wealth understands these basic premises. What most people don’t understand is that for full-time, W2 employees, any hope at real wealth mustBEGIN with preservation of current income.

Nope, at zero/negative net worth, you cannot begin by seeking outside sources of income after long hours at your day job with a high probability of success. And no, you cannot expect any paltry investments made from your cubicle to pay off outsized returns (like investing in stocks, for example).

If your plan is to do either of those things, then you will have a long career. I hope that you like your job. You’ll never (or at best, you will slowly) accumulate large amounts of capital because you aren’t working the system correctly, and you aren’t approaching wealth creation in the correct order.

The 3 Secret Reasons Why Frugality is (& Always Will Be) the FIRST Step of Wealth Creation

Reason #1: Frugality exponentially increases opportunity.

If you are like me, then you might have been listening to all those big shot investors and businessmen out there on the forums. Those guys that say things like, “Don’t limit yourself to a scarcity mindset” and “Don’t sacrifice! Build your income!” They’ve convinced you to, “Expand your mind—money is unlimited.” They’ve convinced you that you need to focus on income, not savings.

Guess what? Mr. Big Shot isn’t wrong! Income (and chasing higher and higher investment returns) is a necessary path forward, the path to financial freedom and true wealth. Youshould build more and more income streams, in ever increasing amounts over time!

But the intimidating big shot investor that looms over you telling you to focus on investments and earning more is forgetting something that is painfully obvious to all of us currently employed in full-time, average, wage-paying work:

You CAN’T seek greater opportunity because if you lose your 9 to 5, you’re screwed! In fact, because you aren’t frugal, you can’t even take a lower paying job with more upside. 

Think about that.

Let’s say you earn $50,000 per year. If I offered you a job that would allow you a ton of opportunity over the medium term, but resulted in a short term loss of benefits and pay, could you take it?

I couldn’t—at least not back when I first started working. I had bills to pay. The car, mortgage/rent, the internet, the partying, the cable bill, and whatever else I spent my money on. But fast forward a year or so later, when opportunity approached, I was able to quit my job and do exactly what I describe above. Why? Because I had become frugal. I lived far below my means and saved a ton of money every paycheck. I could afford to take a chance on a startup and to pursue my dreams.

You will never be able to keep up with the frugal, truly serious fellow in the game of long-term wealth creation if you are totally dependent on that reliable stream of income from your employer. You can’t take risks. And scaling your income is a heck of a lot harder to do when you can’t take risks.

If you can easily get by on significantly less income than you currently earn, you open yourself up to an entire world of possibilities or opportunities. I like to call it “luck.” Those possibilities absolutely include jobs and businesses opportunities that offer short-term sacrifice for huge long-term gain.

Are you in enough control of your spending that you can take advantage of opportunity when it comes your way? Or will you take the long way around?

Reason #2: Frugality negatively impacts your lifestyle WAY LESS than trying to build a business.

It’s always fun to hear people talk about how frugal people “sacrifice” and that “life’s too short” to pinch pennies. It’s pretty incredible that most people out there like to say things like, “Yeah, I wish I could save, but I’ve got a family and want to have fun. I need to focus on earning more money instead!”

These people have created an argument that I am unable to comprehend. They claim that both financial security AND family/recreational time are priorities in their lives, yet they somehow believe that being frugal will hurt their lifestyle more than attempting to earn more money. These people must be living on a different planet than me.

Imagine this scenario:

You currently work a 40-50 hour per week job, and though it pays at or near the median US income of about $50,000 per year, you spend almost everything you earn and live paycheck to paycheck. Also, you live in the United States of America where employers don’t take too kindly to you working on outside businesses or freelance work while you sit at your cubicle.

For those living in a world like the one described here, there are only two times during which they can work on this whole “earning more money” thing:

  1. After work, during those times when they would have otherwise been relaxing with friends or family
  2. During the time they would have been sleeping

Now, I don’t know about you, but having attempted to do those things, I can tell you that working harder and longer hours for my own side businesses was WAY more intrusive to my lifestyle than cutting back on certain physical amenities.

You know what affected my life way less than working really hard to start a business after work? When I moved my work closer to home (new job) and then moved my home even closer to work (new home). I did both and now bike to work.

income

This approach to wealth creation creates both more time and money. Contrast that to me driving an Uber after work. Or trying to build a website from scratch. Or starting a tee-shirt business. All of which I tried. All of which were hard. And all of which produced taxable income. All of which were not fun in the slightest.

Biking is easy. It’s also fun and healthy and FREE. It actually doesn’t negatively impact life at all. When I’m forced to commute via vehicle because of snow, that affects my life. I have to sit in a traffic jam, get no exercise, and deal with parking and the rest of it.

I’m not sure where the word “sacrifice” comes in for you, but you are out of your mind if you think that cutting back on spending in the ways that I’m talking about—intelligent frugality—are hurting my lifestyle, especially in comparison to trying to develop outside income streams from scratch.

But let’s say that you hate biking, love your big swanky apartment/house, and love eating out, even on your own. Think about this: Is it easier to found a business that creates a meaningful income or to get happy with a bike commute, some cheap and healthy lunches, and a slightly smaller, but 2x cheaper apartment/house? Which of those activities allows for more quality recreational time and more financial comfort?

If you think you are going to build a business that will earn you hundreds or thousands of dollars per month while maintaining your quality of life, think again.

Reason #3: Becoming frugal does NOT preclude you from earning more income!

I somehow had the ridiculous proposition in my head that frugality excluded me from focusing on earning more and achieving excellent investment returns. Wow! I hope you’ll laugh at my ridiculousness and learn from it. The complete opposite was actually true.

See, instead of trying to start side businesses and invest with close to nothing, as I became frugal, I started to accumulate thousands of dollars with which to get “serious” about investing and building businesses. Then, I started to accumulate tens of thousands of dollars, which allowed me to get even more serious. Give me another year or so, and I plan to have accumulated hundreds of thousands of dollars.

I’m not talking about taking the employer match on my IRA or building up an emergency fund, which everyone should do regardless of what their other life goals are. No, I’m talking about building up large, liquid capital, enough for you to consider buying things like real estate and small businesses.

If you’re really serious about building wealth, then go out there and earn more and spend less. As I see things, there are really only three logical ways to build wealth, assuming you have low to no liquid assets with which to currently invest:

  1. Save more and earn the same
  2. Earn more and spend the same
  3. Spend less and earn more

Of these approaches, the only approach that seems absurd to me (as someone who wants the maximum financial gain at the least cost to my quality of life) is option two. As someone just entering the game of wealth creation with low to no assets, that is the lowest marginal use of my time of those three approaches and the one most likely to frustrate me.

Trying to earn more money after work starting from scratch is the approach that will have the largest negative impact on your lifestyle with the lowest impact on your financial position. You’ll give up after six months. And you’ll pay a hefty amount of income tax on your earnings.

It’s amazing to me that I even considered doing the really hard stuff involved in becoming an entrepreneur from scratch, when tens of thousands of dollars I was already earning were begging to be rescued. And it was so easy. And it made my life so much better. And enabled me to buy real estate, which I guess made me an entrepreneur automatically.

first-deal

Conclusion

Before you write off frugality as a limited mindset befitting only the narrow-minded, remember that in this article we are referring specifically to the case of those who currently work full-time jobs. These are the people who currently have no or low liquid assets and live paycheck to paycheck.

For these folks, I believe that for the reasons stated above, starting with frugality is the fastest, highest probability way to accumulate large amounts of wealth quickly and to increase income and investment opportunities exponentially. It’s also the way that they can do that without significantly hurting their lifestyles. To repeat what we all know, building wealth comes down to two things:

  1. Accumulating larger and larger amount of capital
  2. Investing accumulated capital at higher and higher returns

For the employee with low assets, there really are few good ways to accumulate wealth by focusing in on investing or building additional income streams after work hours. Sure, it’s possible and you’ll hear about those stories from time to time, but I’ll bet you that those stories exemplify extraordinary hard work or some little known advantage.

Why do all that hard work and not take the easy pickings of giving up needless luxuries that really don’t improve your quality of life at all? If you really want to get rich that badly while also living the good life, why would you work long hours on earning taxable, after-hours income, when you can put in far less effort for a far greater marginal return by focusing on preserving what you already have?

Want to live comfortably with more free time and experience the magic of exponentially increasing control over your own destiny?

Cut back on needless expenses. Become frugal. Build assets.

Then, build businesses!

Source: biggerpockets.com ~ By: 

To Thrive You Need to Wake Up to These 5 Hard Truths

Entrepreneurship isn’t an easy journey, and we’re in uncertain times for sure. With overwhelming complexity, insurmountable change and big competition, it’s became more important than ever to be strategic and intentional.

I want to share a couple insights that I feel can make a different in the results you achieve in your life and business, but more importantly help you thrive regardless of the economy. Some might make you mad at first, that’s fine. Sometimes the things you don’t want to hear are the things you need to hear the most. Most blogs you’ll read will try to make you feel good, and tell you exactly what you want to hear. That createsno real change, just a good feeling in the moment. They don’t spark your mind or make you think, they don’t challenge you, and they don’t go against traditional thinking.

This one will.

1. Do the opposite.

Strange tip for those not familiar, but a real GAME CHANGER. This is a killer strategy for those serious about improving their life. The more people do something, the less valuable it is.

  • Most people over eat and eat based off pleasure vs. health.
  • Most people sleep in and have no morning routine.
  • Most people make excuses instead of progress.
  • Most people focus on the negative vs. the positive.
  • Most people spend more money than they make.
  • Most people talk about success vs. take action.
  • Most people go to college, get in debt and get an unrelated job after college.
  • Most people pray for weekends, and hate Mondays.

Don’t be like most people! No one wants to be typical. We all want to be special and different, yet most of us do the same things. The majority of us live like one another and then wonder why we continually don’t achieve any real results or success in our lives. We follow each others’ lead and rarely break the mold. Life becomes so much more convenient when you really take this seriously.

All the greats in our society live life to their own choosing, not other peoples. One way to be outstanding and valuable is to do what others aren’t doing, or what most can’t.

2. The 90-day focus.

What is your #1 goal that you want to accomplish in the next 90 days? What’s the #1 skill that you need master that will have the biggest impact on your #1 goal?

There are specific skills you have to master to reach that goal at a fast rate. Skills are weapons in your industry, so figure out the top skill you need right now and master it. Sadly, most people operate on information overload instead of mastery and have too much noise. Or, even worse, they learn just enough to get by and stop learning. Apple said it bluntly….

“We shouldn’t be criticized for using Chinese workers, the U.S. has stopped producing people with the skills we need.”

Ouch!

3. Destroy your momentum killers.

Write down your top three potential distractions and momentum killers that have held you back in the past. Now create a prevention plan for each. If you don’t have a plan to interrupt your interruptions, your plans will always be interrupted.

Distractions kill productivity, creative expression and income. Either you control your days or your days control you. Learn to concentrate and focus on the most important tasks with no interference or distraction. Prioritize your activities based on importance and then get to work with no distractions! Remember, activities without purpose are the drain to all life, wealth and peace of mind.

4. Analysis vs. emotions.

Base your decisions and actions off intelligence, not emotion. Ask yourself before every choice you make “is this the most intelligentaction to take right now, and does this action or decision get me closer or farther away from my 90-day goal?”

When you pass the stage of making decisions based on what others think or current emotion, you will start seeing real success. The best can silence their ego, push away anxieties, and analyze the situation. Don’t judge, don’t overreact, just analyze.

5. Stop the ideas, start the execution. 

“Innovation is  rewarded, execution is worshipped.”          —  Eric Thomas

Hard work trumps IQ seven days of the week. Great accomplishments don’t happen overnight or even in a few months. They will take years of consistent action linked by failure, sacrifice and discipline. If you want real changes in your life, expect that your actions need to be substantial. If you truly have the desire to create something you’re proud of, your addiction to ideas and other mindless distractions must be retired and replaced with meaningful action.

I know people who would rather poke their own eye balls out than take action, and I always find them struggling with another challenge followed by another validation or excuse. Execution is the foundational key to success. Once that happens, doors will consistently start opening for you.

Get serious about who you are and where you want to go. Realize the only way to get there is to differentiate yourself, invest in real education and start doing more than your talking.

Source: entrepreneur.com ~ By: Peter Voogd

10 Differences Between Middle Class And Rich People

According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined. But what about the people in between? The middle class? You may be considered middle class. You’re not poor, but you’re not rich…yet. The middle class seems to be shrinking, according to the data revealed over the last couple decades. That means you’re going to be less likely to be middle class in the future. You’ll more likely be poor or rich. Which side do you want to be on?

If you want to be on the side with the rich, you’ve got to start thinking like the rich. Here are 10 differences between middle class and rich people for you to learn from…

1. The middle class live comfortably, the rich embrace being uncomfortable

“Be willing to be uncomfortable. Be comfortable being uncomfortable. It may get tough, but it’s a small price to pay for living a dream.”
-Peter McWilliams

middle class and rich differences

“In investing, what is comfortable is rarely profitable.”
– Robert Arnott

It’s comfortable to work a “safe” job. It’s comfortable to work for someone else. The middle class think being comfortable means being happy, but the rich realize that extraordinary things happen when we put ourselves in uncomfortable situations. Starting your own business is a risk and risks can be uncomfortable, but a little risk is what it takes to create wealth and achieve superior results.

Step out of your comfort zone. Look at all your options. You will have to be at least a little uncomfortable if you want to become rich. You might even have to fail and that’s great, because if you’re not failing, you’re not doing much.

2. The middle class live above their means, the rich live below

“There is no dignity quite so impressive, and no one independence quite so important, as living within your means.”
-Calvin Coolidge

rich and middle class

You won’t catch the average millionaire in a $100,000 car or a multi-million dollar home. The rich don’t spend their money on depreciating liabilities, they spend their money on appreciating assets and they live below their means. On average, the rich drive cars that are a few years old and they don’t buy them new, according to studies done in the book “The Millionaire Next Door.” Even if they can “afford” that fancy new Escalade, they usually don’t buy it.

Remember, if you earn $1,000,000/year and you spend $1,000,000/year, you’re still broke.

3. The middle class climb the corporate ladder, the rich own the ladder

“The richest people in the world look for and build networks; everyone else looks for work.”
-Robert Kiyosaki

Middle class corporate

The middle class tend to work for someone else. They have a job. A career. Upper middle class tend to be self-employed. They own a job. The rich tend to own the business. They own that corporate ladder that the middle class are busy working up. The rich understand that they need more people working for them to earn more money. The rich understand the power of passive income.

4. The middle class are friends with everyone, the rich choose wisely

“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”
-Warren Buffett

rich and middle class friends

The rich understand that when you surround yourself with successful people, your own success will follow. Likewise, surrounding yourself with unsuccessful people tends to have the anticipated effect. Your income is usually the average of the incomes of your three closest friends. If you want to earn more, hang around people who earn more. It’s all about aligning your mindset with the mindset of successful people. If you want to be rich, you have to think rich.

5. The middle class work to earn, the rich work to learn

“When you are young, work to learn, not to earn.”
-Robert Kiyosaki

work to learn, not to earn

The middle class are easily persuaded to change jobs when someone offers more money. The rich understand that working isn’t about the money, especially in the early years. It’s about developing the skills and traits you need to develop to become rich. That may mean working a sales job to better understand the world of selling. Or it could mean you work at a bank to better understand accounting. If you want to be rich, you should be working to learn the skills you need to become rich. Most rich people didn’t get there by earning a high salary.

6. The middle class have things, the rich have money

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people that they don’t like.”
― Will Rogers

middle class and rich difference

Back to the fancy cars and big houses. That’s where much of the middle class spend their money. Drive through a middle class neighborhood and you will usually see brand new cars, expensive landscaping and high-dollar homes. The rich understand that to become wealthy, you have to want money more than you want things. If you keep buying things, your money will keep going with them. It’s funny how that works. For example, Warren Buffett still lives in the same home he bought in 1958. And he only paid $31,500 for it.

Stop buying things and start focusing on keeping, saving and investing the money you earn. If you are a shopaholic, start shopping for assets. Become interested in investing, then look for bargains on stocks and businesses instead of shoes and electronics. That being said, it’s not all about saving your money.

7. The middle class focus on saving, the rich focus on earning

“Your greatest asset is your earning ability. Your greatest resource is your time.”
-Brian Tracy

middle class and rich people

“If you would be wealthy, think of saving as well as getting.”
-Benjamin Franklin

Saving is important. Investing may be more important, but earning is the foundation of both. You understand that you need to save and invest, but to really achieve extravagant goals with them, you need to earn more. The rich understand this and work on creating more avenues to earn and earning more with the avenues they have. If you really want to become rich, work on your earning ability, not your saving ability.

8. The middle class are emotional with money, the rich are logical

“Only when you combine sound intellect with emotional discipline do you get rational behavior.”
-Warren Buffett

middle class and rich money

Steve Siebold interviewed over 1,200 of the world’s wealthiest people over the past 30 years for his book “How Rich People Think”, and according to him there are more than 100 differences in how rich people look at money compared to the middle class. One of the key differences he found was that the middle class see money through the eyes of emotion, but the rich see money through the eyes of logic. Making emotional financial decisions will ruin your finances. Warren Buffett explains that investing has much more to do with controlling your emotions, than it has to do with money. Emotions are what cause people to buy high and sell low. Emotions create dangerous business deals. Leave emotions out of this and turn to logic.

9. The middle class underestimate their potential, the rich set huge goals

“Set your goals high, and don’t stop till you get there.”
-Bo Jackson

middle class and rich goals

The middle class set goals. Sometimes. It’s the capacity of the goals that differ from the middle class to the rich. The middle class set safe goals that are easily obtainable. The rich set goals that seem impossible, difficult or crazy. But they know they are achievable. It all comes back to having the proper mindset.

When you’re setting your goals, ask yourself if they could be bigger. Ask yourself if that’s really all you can do or if you can do more. I think you can do more.

10. The middle class believe in hard work, the rich believe in leverage

“It is much easier to put existing resources to better use than to develop resources where they do not exist.”
-George Soros

rich and middle class workers

Hard work is a necessity. For all of us. If you want to reach the top (whatever that may be for you), you’ve got to put in the work. The problem is that hard work alone will rarely make you rich. You can’t become rich by doing it all yourself. You have to use leverage to truly become rich and stay that way. Leverage works in many ways, from outsourcing to investing. The more leverage you can incorporate, the more time you will free up to work on the things that really matter in your business and your life.

Some differences between the middle class and the rich are vast, while others may seem simple and minor. The fact is that if you want to become rich, you have to think like the rich and do the things the rich do.

Source: lifehack.org ~ By 

You Deserve to Be a Millionaire. Follow These 12 Tips to Get There.

I started with nothing and have been blessed with enough focus, commitment, follow through and the ability to not make excuses that I have done extremely well in my life.

I recently did a show on GrantCardoneTV.com on How to Make Your First Million, which was streamed on Periscope and Meerkat and viewed live by over 10,000 people.

Here are the takeaways from the show:

1. It’s never been easier.

It has never been easier, so don’t make it so difficult. There is so much money in the world today and so many ways to get yourself known. The first thing you have to know is that it’s out there and it’s not that hard. In fact, everyone will be a millionaire in their lifetime: $50,000 per year times 20 years equals $1 million.

2. Saving won’t do.

The old ideas of saving every penny is not the way today. You can’t simply save your way to the first million without becoming old, at which point the money probably won’t matter to you.

3. Live below your means.

Live below the money you are making. Not because you are depriving yourself, but because you are seeking to bank millions. No one has ever done business with me because of the suit I wear, the watch I have on my wrist or the car I drove. Live below your means until you don’t have to anymore.

4. Push every tax angle you can.

Learn the tax code and use it to your advantage. Quit bitching about taxes and learn how it can benefit you. The code was put together to give preference to earners. I have joined multiple multi-level marketing companies while still being an employee so I could take advantage of write-offs like the home and car. These were, and are, legitimate ways for me to reduce my tax bill and possibly make some more money — plus I have a chance to surround myself with great people.

5. Mature from income to investor.

The way to get rich is to make investments, but you can’t do that if your income doesn’t allow for you to set aside money to invest. The only reason to make and save money is so that you can invest it. Only invest money in projects you know will score and never give up your income.

6. Start acting like a boss.

Quit acting poor and quit acting like you are a spectator. Boss up in everything. When the bill comes for dinner, boss up. When you have to invest money to get information, buy a list, grow your brand or learn to sell you need to write the check like a boss, not like a little whiner.

7. Automate a pay-yourself-first program.

Set up with your employer to pay yourself to a savings account so that you have money deposited each month before you get a check to pay your bills and live your life. This is one thing I started doing when I was 26 years old that kept me “broke” without money to lose or waste and forced me to continue to hustle. This is the step that will make number five possible.

8. Be in a hurry.

Be the hare, the turtle and the millionaire! The only thing that comes to those that are patient are the crumbs left behind by those in a hurry.

9. Do the millionaire math.

Do the math on what it takes to hit a million. If you make $50,000 a year and can figure out how to put away 40 percent of it (that is my saving target) it will take you 50 years times $20,000 per year to get there. If you don’t do your math you won’t get there because you won’t have the right mindset. Math is a universal language.

10. Do not diversify.

I know the diversification concept is popular, but it’s wrong. If you are going to bank a million before you are old and tired you need to pick something you believe in and know it’s going to work and go all in.

11. Seek multiple flows.

If you don’t get multiple flows happening you will never create financial freedom. Don’t confuse number 10 with multiple flows. These are not conflicts — have parallel flows going. Don’t make your first flow disconnected, make it similar so that it takes less energy and less resources.

12. Avoid spending money or tying up your money in homes, IRAs or colleges.

I know it’s not popular, but these are traps. Show me someone that became a millionaire from buying homes, other than me. Flipping homes, by the way, is not buying homes — that is a real estate play. Wall Street has convinced you to do these things to trap and immobilize you.

You deserve financial freedom. You should have your financial targets to be a millionaire up until the point that you become one. Then your target should be to hit 100 million!

Source: entrepreneur.com