People don’t lack time, they lack prioritization. When you talk to regular people, they are always “busy” but then never have any results… year after year after year after year. This is due to a lack of prioritization. If you ask people for investment advice however… they will quickly pitch some sort of investment. Completely ignoring the fact that they aren’t even rich. Ask them for a good tax planner and they won’t know the answer, they also won’t try to BS because they know there is a “right answer” versus an opinion.
So we’re going to address the most common excuse and “life debate” in a single post. Your regular guy will say “oh there is no guarantee of success so better to live it up now”. Then you ask them “Is Budweiser and pizza really living it up?”… Now they get offended. It doesn’t really make any sense so instead we should start with a general life philosophy and work backward to solve for the right answer. Very similar to math class, where the fastest way to learn was getting the answer from the back of the book, figuring out how it worked and ignoring what your teacher was saying (since he/she has to teach to the lowest common denominator in the group).
Life Philosophy: Before you begin to prioritize, you have to come up with a general life philosophy. If you’re reading this blog you’re probably not interested in a lentils and rice diet with a blunt in your hand. Highly unlikely. It is more likely that your “philosophy” is *maximize full potential*. If this is true your priorities should be flipped when compared to the general public.
If we can start there as a basic agreement point then the stages are pretty clear: stage one is wealth accumulation, stage two is protection of health and longevity and stage three is relaxing and paying it “forward” to a younger generation or if you decide to have kids, your kids in that case. As usual, we don’t make any comments on your decision to have kids so stage three could be charity etc.
Stage 1 – Building a Foundation: One of the funniest arguments we get on this blog is “you don’t get to have a lot of fun from age 20-25”. Instead of debating the exact time frame, the philosophy is actually more extreme than that. “As long as you’re broke how is it possible to actually have fun spending money?“
That last part needs a lot of emphasis. If you’re broke how is it even possible to have fun? Do people really enjoy eating fast food and getting high on the beach knowing that it might cause them to save $0 in the month? This doesn’t sound like fun at all. This actually sounds very stressful. Why would spending everything you make be enjoyable when you know that it’s going to put you into an unstable financial position. This is one where we still have a hard time understanding the other views from regular people. Working two jobs or working longer hours initially isn’t stressful because you know it’s pushing you into the right direction. Doing drugs and drinking to lose all productivity the next day when you’ve got nothing sounds incredibly stressful.
What is a Good Foundation? A good foundation is pretty simple, you have enough money to last you about 10 years (only covering your basic needs, food, housing, electricity and your cell phone bill – ie. any recurring costs). Until then how is it fundamentally possible to spend money on things that don’t generate returns. Even worse are the people who have a good year then spend $40,000-60,000 on some new car, setting them back a year at minimum. It just doesn’t make sense. Sure it’s not physically possible to have zero social interactions while you’re building a foundation, but the amount should be severely limited since you can’t really enjoy the going out process in the first place.
Find One Skill: The first part of building a foundation is finding something you’re good at. If someone has zero talent they won’t be good at anything. But. That is highly unlikely. Simply take a list of the things that will make money: sales, tech etc. Find out which one you’re best at and that’s a starting point. Chasing your passions doesn’t work. We know thousands of people who are passionate about dating beautiful women and drinking alcohol. Unfortunately neither of those make money unless you’re doing something illegal or conned your way into being a trophy husband.
Before looking for a skill you have to ask “will this make money” if the answer is no, then it’s not a skill worth pursuing *today*. Emphasis on today. When you’re rich you can follow any passion you like even if it won’t make you money. This is why rich people have weird habits/hobbies ranging from collectables to unnecessary things like a tennis court in their backyard.
Turn the Skill Into Profits: Now you’re ready for step two of building a foundation. Find a career that pays for your skill. In fact, the bar is so low we’d say you can even start with a job (time for money exchange). Everyone has to start somewhere. Assuming you start with a time for money exchange for your skill then you need to move from this into a career or business.
Example: you find out you’re good at sales. You have two options a hourly position that doesn’t pay you commissions but pays you per hour, the product has a high price point. Option two pays you commission but the product you’re selling has a low price point. The answer is clear… Choose option one. Why? Selling high ticket items is a lot more transferable to future positions. Selling low ticket items will move you into the direction of business to consumer transactions versus business to business transactions. Follow the money!
Find Another Source: So you’ve got one stream of income going. While you’re at it, it’s time to find another income stream. This is going to vary from person to person. For people who are sitting at desk jobs you’re better off going into: 1) online sales, 2) design and 3) random tasks on Fiverr. Now, the last one gets a bad reputation because people do it completely wrong. You use Fiverr to figure out what tasks you’re good at. Who knows what it is. The good thing about these low paying transactions is that you can get immediate feedback on the quality of the work. Once you figure out what you’re good at you branch out and start a actual company. Most simply sit there and complete tasks then complain that they aren’t making money.
In a secondary scenario, if your skills are more physical in nature, you worked in construction for example. Well in that case, the manual part will be painful but you can probably scale that into fixing houses, walls, sinks etc. This is then naturally going to lead to real estate flipping. Not a hard transition.
Create Ownership: At this point you’re ready to move into ownership. You get to take your skills (hopefully at least two) and turn it into something that generates recurring income for you. Whatever you do, do not start an informational website such as this blog as it’ll tank during a recession and e-book products/seminars go to near zero during downturns. This is 5x as true for anything services oriented like personal training.
You take your skills and move them into recurring revenue. If you’re selling product X, then you create product Y (similar to product X) and simply out compete them on the sales side. You have to compete with something and it usually comes down to your personal skills or an improved product. Trying to compete on “process” is dying due to the scale of Amazon. It really is that simple. You take what you’re doing create a *product* and decide if you can make it better or simply sell it better. Ideally you can do both, but we’re making it even easier than this.
At this point you’re pretty much good to go. You have a couple of sources of income, one main one (your primary skill) a second one (your secondary skill) and now you’re on step three building something that attempts to combine the two. Please do not message us telling us this is impossible, the vast majority of people who work in office jobs spend more time reading worthless news articles and talking about the latest sports game than doing work.
Time Frame: How long does this all take, around 3-5 years and you’re going to be on the right path. We’ve stated here “give me three and you’ll be free” because that’s how long it usually takes for people who want to be successful. It’s not all that fun, but you weren’t going to have fun spending the small amount of money you had anyway. When you look back you laugh at the idea of spending money when you’re on;y saving 10% of your income. And. As long as you didn’t make a cardinal mistake: assuming income lasts forever, going into industries that will die before you get rich or trading your time for money forever… you’re set for life.
Stage #2 – Health and Longevity: Once you’ve gotten the money situation figured out, you can now transition into living a pretty balanced life. Don’t get trapped into believing you “need” to be a billionaire. No one needs to be a billionaire unless they have severe insecurity issues. We call this stage “health and longevity”. For those that are deeply curious, we’re certainly in this stage. Making more money is fun but it’s not worth chasing in the expense of health. Working 10 hours in a day once and a while is fine. Working 10 hours a day every week will never happen again (unless something extremely profitable comes up).
Mental Health: If you’re rich why are you working, shouldn’t you just sit on the beach all day? This is crazy logic from people who aren’t rich. You get bored. Making money becomes a video game where you’re simply trying to “level up”. Sitting around and drinking all day gets boring eventually and there are only so many rainforests and waterfalls you can see before that excitement dies out. You’ve hit maximum travel overload when you land into a brand new foreign city and are not excited/emotionally rattled at all. For fun this happens at around the 50-60 city marker.
Here is the art to the balance game. If you’re going to sleep thinking about work every night, you’re working far too much. If you’re waking up excited to do something productive, you’ve got the right balance. It’s a psychological game. When you’re working too much you think about it all the time particularly when falling a sleep (you’ll experience this for 3-5 years or so).
Physical Health: This will need some work after your first 5 years of pain or so. Something will happen. You’ll gain a little too much weight. You might have some skin flare up. You might have knee problem. Who knows. Your goal is to get your body back into high quality shape. This is not a debatable topic to us. If you’ve already made enough money to be set for a decade or more, you want to create quality hours out of the next 20-30 years.
In fact, you have to build in increasing time for physical work. This is going to to include stretching, more attention to your diet and having higher quality equipment for all of your activities (skiing, running shoes etc.). An extremely small price to pay for having a solid 20 years straight of fun as your peers become over weight and have injuries to deal with.
Social Life: This ramps up quickly. Long gone are the days of cheap bars, going to “spring break” to party with other degenerates and *cheap* house parties. It slowly turns into private events from your network of successful people. We still get a good laugh when people think this doesn’t exist and that all the women who show up are old. They don’t realize that they are signaling to the world that they are unsuccessful.
Getting back to the point, you want to slowly merge “the triangle”. The higher you go up in any field, the more likely that everyone knows each other. This then leads to a natural screen for successful people. This screen then allows you to figure out who has a balanced life (good social contacts) and then you throw private parties/events. It’s just how the game goes.
Reducing Time Drains: The last item on the list is something you get to experience with larger amounts of money. Rich people will spend for comfort and saved time, since they know both are finite items. Comfort is a finite item since you can’t “reverse” a particular experience. And. Time is naturally much more valuable than money as your quality of life degrades unless you want to make a wild bet on aging being reversed in the future.
Here is a good list of time drains: doing laundry, washing dishes, cleaning the house/apartment, long distances to your favorite locations, long distances for flights and time spent in transit. This is actually quite a bit. If you can free up just 10 hours a week this results in around 433 days of life saved over 20 years. A huge number, you would have spent over a year of your valuable time doing tasks that are not fun or entertaining in anyway.
Stage #3 Giving it Away: We’re not here yet, there is too much fun to be had with money right now. Eventually though, you’ll be forced to give it away. Again. Unless you believe we’ll “solve” death fairly soon. Giving it away comes in two forms: some sort of charity or family/friends. We’re definitely not going to give any advice on which path to take there since it’s too emotional which leads to arguments day and night.
The steps are quite simple though, you find a way to make sure your assets are divided appropriately when you die. Before this if you’re extremely rich you can begin giving some of it away before that happens. While it is fun to say that the ideal net worth to have when you die is “$0” it just isn’t logical. You are always going to have money working for you until you die, so a large chunk will be there when the game ends.
One interesting way to begin the giving away process is to do small amounts to people you would consider for a larger donation. This lets you know if they would actually put it to use or not. Imagine giving someone a car only to find that they destroyed it within a year. This compares to another person who takes impeccable care of the car and it looks brand new. Doesn’t take a lot of thinking to give more money to person two.
Conclusion: There are three real stages: getting money, stretching out your “prime” and then giving it away. Stretching out your prime is the best part of life (so far), as you’re in good health and get a solid two decades or more to enjoy every aspect of life. If someone wants to “live it up” without going through the three stages (attempting to skip them by winning the lottery) we hope they enjoy their beer pong and cheap Tequila shots at age 40.
Q&A Announcement – We’ll hold a Q&A on Wednesday August 7
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