How To Get Rich!
First, watch the “Is Scooby Rich” video below to learn what it means to be rich by my definition:
Part 1/5 Its not how much you make, its how much you save that counts!
Black Friday which is the biggest sale event of the year is this Friday and its a great opportunity to talk about how to get rich. So how does black Friday relate to being rich? Great question! People get whipped into a spending frenzy with black Friday sales and convinced to spend money on all kinds of things they don’t really need just because its a “bargain”. Buying stuff you don’t absolutely need is a waste of money and its how you become poor.
Rather than discussing how to get rich in this first video in the series, we are going to talk about how to get poor because its much more simple. On this Friday, black Friday, millions of young men and women who have just gotten their first job recently are going to make a seemingly small decision that will lead them to a life of poverty. Here is what is going to happen. Friday when they are out shopping for christmas presents, they will eye that big 48″ TV that is 50% off. Their current hand me down TV works fine but its embarrassingly small. Then the rationalization starts. They don’t have the money for the TV but the store is offering a $75 credit for anyone who signs up for a store credit card today. Wow! Another $75 off the 50% off sale price is a BARGAIN … AND you can just make small monthly payments. The minimum payment will be $32/month and with a big TV they rationalize that they will go to the movies less and save at least that much money per month. Yes, they have just convinced themselves that they are saving money by buying a TV that they cant afford. Guess what, they have just stuck their foot into financial quicksand that they will most likely never escape from. Thats how it starts for millions, that first credit card purchase for something they cant afford. Its seems like such a small decision. It seems ludicrous that a decision that small can be a pivotal event that will determine lifelong happiness, but its true. They are going to be slaves to consumer credit card debt for the rest of their sorry lives just because they bought that first TV on credit.
Please. Do NOT get sucked into the black Friday spending frenzy madness. Remember that buying stuff you don’t absolutely need puts you one step closer to poverty and one step further from financial freedom. PLEASE start a new christmas tradition in your household that involves buying less stuff! Consider drawing names for a single gift and spending limits. Consider home made gifts. Consider giving certificates for services you provide yourself like a car washing or a back scratch.
… an entire generation pumping gas, waiting tables – slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need.
Tyler Durden, Fight Club
Video 2/5 Invest in Yourself!
How to get rich – invest in yourself!
So in the first video in ths “how to get rich” series we talked about avoiding all debt and saving money, if you havent watched that video, please do it now. This second video is about college and investing in yourself.
This advice of “investing in yourself” has been repeated over and over until it has become a trite, meaningless and dangerously wrong. The trouble is that most people mis-intrep it and do exactly the wrong thing. They ring up tens of thousands in debt and end up with a meaningless piece of paper than means nothing in todays job market nor does it bring them any closer to their dreams. Back when I graduaded from high school in the 70’s, the advice of going to college was sound because back then you could graduate with virtually any BS degree and get a good paying job, not so anymore. In America where college is expensive, it still makes sense, but only in a very few situations. In the other cases, investing in yourself takes on a completely different form. Lets first talk about cases where going to college probably makes sense and then we will talk about how to figure out if it makes sense.
- You are in the top 10% academically and want to be a doctor, lawyer, or other high paid profession.
- You are good in math and science and want to go into engineering or other traditional, well paying professions.
- You are a true academic, are in the top 1%, and want to be a professor at a university.
If you are not in one of those three groups, it does NOT makes sense to go into debt for a degree! I dont care WHAT the fly-by-night industrial-park university promises as far as job placement. If you dont know what you want to do with your life, do NOT go into debt to figure it out! You can’t afford the price tag of college as an endless party. If you want to take classes and find yourself, live with your parents and take classes at your local junior college. Dont take the easy classes and dont follow any degree program either. What I recommend is to choose half your classes based on which you think would be interesting. The other half, I would recommend that you take on the basis of which professors are the most highly rated, regardless of whether you find the subject interesting or not. I will be willing to bet you that you will end up making one of those subject your lifelong passion because an inspiring teacher can awaken a whole new world for students.
So lets talk big picture here. It would be nice if you could follow your lifes passion from the start but in most cases, its not possible. Every year there are about 1 million asipring high school drummers who want to start bands and only one or two of them will make it every year, not good odds. This first career is to build up your savings so you can follow your passion full time. It doesnt have to be your #1 passion but it should at least be something you have some natural talent for. If in high school you sucked at math and science but love repairing your 1952 ford pickup then dont waste your time going to enginnering school, get a job as an auto mechanic.
So, the first skill that EVERYONE needs to become rich is the ability to do a spreadsheet. You need to be able to answer “what if” questions accurately and make decisions and the spreadsheet is the best tool to make those decisions. This video has homework, if you dont know how to use a spreadsheet you need to learn. Dont take a class, thats a waste of time, teach yourself. If you get stuck, google it. Here are two real world problems I want you to solve:
- Spreadsheet #1 – Car purchase decision. Which will cost you the least over 5 years?
- buying a 3 year old honda fit
- buying a new Ford Mustang
- buy no car, take public transit, uber and use a bike for local errands
I want you to make reasonable assumptions for all the data you need, if you are not sure, google it! Make sure to include ALL costs. Maintenance, insurance, gas, etc. Check out craigslist to get car prices and local banks for car loan rates.
- Spreadsheet #2 – What will allow you to have the most money saved 10 years after you graduate from high school:
- go to college for 4 years, cost $29,000/year borrowed with student loans, get engineering degree, get job for $60,000/year.
- apprentice as a plumber, then become a unionized plumber.
- start work right after high school and get minimum wage for 10 years.
Again google to make reasonable assumptions. This is real life. You have to take the best data you can and make decisions based on it. If you cannot answer questions like this, you are going to have a very, very hard time becoming rich. You NEED to be able to use a spreadsheet.
OK, so at the beginning I said that investing in yourself isnt just limited to go to college, lets look at that more in depth. Most people today over-estimate the value of traditional schools and under-estimate the value of self-learning. You dont need a framed piece of paper with a fancy stamp, what you need is a SKILL! Employers hire skills, not framed paper. Take any area and develop a SKILL and teach yourself, dont take a class!
Interested in art? Buy a copy of photoshop and take a year to become an expert at using it! You now have a ticket to well paying job you will love.
Want to become a writer? Buy a copy of Microsoft Publisher and spend a year learning it inside and out so you are an black-belt expert. You cant follow your dream and write novels at this point BUT you can get your foot in the door as an editor.
Do you love airplanes? Dont spend $80,000 getting your A&P liscense at an aviation university (Airframe and Powerplant) Get plans and BUILD an airplane! Not only is it cheaper but you will learn so much more building your own plane from scratch. No, you wont have an A&P liscense but your experience will lead to any number of job offers. For example, in the plane I have built, I have to say that my favorite thing was the fabric covering and rib lacing. These are dying arts with a high demand for skilled craftsmen. If I wanted a job, I could get one tomorrow doing rib lacing.
So anyway, “investing in yourself” needs to be though of in much broader terms than simple degree programs.
While we are on the subject of getting rich, I have two more homework assignments for you. Please read the following books:
- How to win friends and influence people, Dale Carnegie
- 7 habits of highly effective people, Steven Covey
Thats it for today, remember that 99% of the benefit of this video will come from doing your homework, so please, get out that spreadsheet, figure out how to use it, and solve those two problems as well as read the above books.
Video 3/5 The secret to becoming rich
Let me tell you the sad truth. I am going to give you the “secret” for how to get rich and 95/100 of you will decide that its too much work to be rich and that you would rather be poor. If you are not willing to work really hard to be able to follow your dreams and passions every day, then stop wasting your time reading this, buy a lottery ticket, and cross your fingers. The whole “You Only Live Once” (YOLO) mentality that is so common these days it the polar opposite of what ….
When it comes to money, it is critical that you be able to tell the difference between needing something and wanting something.
Need: You will die or go to jail if you do not buy/have this item. Examples: food, shelter.
Want: Everything else! You dont need a nice apartment for shelter, thats what you want. All you need is a tent or your mom’s sofa. You need transportation to get to work to make money but you only need a bicycle, a car is what you want.
I will be giving five different plans for people of different ages and in different situations but here is an overview of what many of them will be like.
Video 4/5 When to have children
If you have strong religious beliefs about when to have children and how many to have then do not watch this video. If you are interested in how the timing of you family can drastically affect your future and that of your children then watch this:
Video 5/5 Cars can make or break you
Think very carefully about your transportation. Making bad decisions can ruin your chances of financial independence. If you do what most people do and you will never have a penny in your savings account. Read about how to own a new Porsche for $250 a month.
Overview of plan to get rich
- Pay off all consumer debt. This will require drastic lowering of your standard of living in many cases. Get rid of the car and ride the bus. Give up that nice apartment you have alone and rent a room from friends. You get the idea. Its not easy to pay off all your debt but its essential you do this.
- After your debt is paid off, continue living like a starving student and save, save, save.
- Only work 8hrs/day, dont work two jobs. Every spare hour you are not working follow your passion and become an expert in that field. You sleep 8hrs a day and work 8hrs a day and that leaves a full 8 hours. There is no reason why you cant spend at least 4hrs a day following your passion – learning, practicing, living and breathing it. Start a website, join clubs and organizations centered around your passion, become the person that people come to for advice and answers.
- Keep saving until you have enough money that you could live 12 months without any income
- While keeping your primary job, start a side company in line with your passions.
- When the side company is paying for half your expenses, quit your day job and dive into your passion 100%. You have a year’s expenses saved up which will now last you two years because your passion is providing half income.