1:58

All right, this one's going to be a hot one because I'm talking about

2:02

things that maybe some people don't want to talk about. The fact is

2:05

that the middle class. If they stay

2:09

with their thoughts and their actions and the things that they. Do, they're never going

2:13

to become rich. But it doesn't have to be that way. And

2:16

listen, here's the deal. I'm a son of an immigrant.

2:20

My dad came here at 17 years old with nothing. He came

2:24

here and went to school. I didn't come for money. I didn't have a silver

2:27

spoon. I came from an engineer

2:31

and a homemaker, and I went to school. I did some

2:35

things. I did enough things right to be successful. I did enough things

2:39

wrong to be educational. I made a whole boatload of mistakes.

2:43

I've lost money left and right, but I've actually

2:46

been able to grow from it and go from it. And I want you to.

2:50

So, and I say this not. Not for

2:54

any other reason other than. To say, I don't care what your. Age

2:58

or stage of life is. I don't care what the side

3:01

of the tracks that you think you were born on. I don't care what your

3:05

upbringing is. What I care about is that

3:09

we. Find a solid place as you are today.

3:13

Whatever happened in the past is the past. And let's figure out how

3:17

we can change the trajectory for the future. How do we shift

3:20

that financial future for you? And there's some things that I noticed

3:24

as the decades have gone by of. Me working with

3:28

people like you to. Build wealth, to build financial

3:31

freedom, to build a business, to build a life. In a

3:35

different way that maybe hadn't come

3:39

about. There were some things you weren't talking about. There were some things

3:42

you weren't doing. There were some things that that can happen.

3:46

But here's the deal. It's not your fault. It's not your

3:50

fault. I'm going to walk through twelve things. That

3:54

I think that until we get. These straight, no matter what our age. Or

3:58

stage are, we're not going to find the path to wealth

4:01

or richness or financial freedom. Or if we

4:05

do, it's going to be a rough go to get there. So let's jump in.

4:08

I'm going to jump to the iPad and we'll write these things down.

4:13

Here's the first one. And this is the thing that I grew up

4:16

with and many of us grew up with. Number one is not talking

4:20

about it. Okay. We are in a situation

4:24

where what happens is that we're not

4:28

talking about money. We're told, how many of

4:31

you actually were raised in a home

4:35

where they. Said, well, talking about money is impolite.

4:39

I remember, I remember. I remember

4:43

we called him an uncle. He wasn't an uncle, but he was driving this

4:46

nice, nice sports car. I had no idea what it was. It was an Aston

4:50

Martin in hindsight, but he had this

4:54

phone in it way before phones were vogue. I mean, it was

4:57

this big phone, and you had to dial a central station, and they would

5:01

connect the call and all that stuff. And I remember looking at him and. Saying,

5:05

how much do you make? My mom almost spit

5:08

her food out. She was like, do not ask that. Are

5:12

you kidding me? That is so impolite. And maybe it is

5:16

asking what someone. Makes, but talking about money

5:20

isn't impolite. It's actually a necessity. Here's the deal.

5:26

A recent study showed that 72%.

5:28

72% of people are stressed about money. 22% say that

5:32

it's extreme stress. So if we're having stress around

5:36

money, but we're not talking about it, how do we relieve the

5:39

stress? How do we learn things? See, the problem is that

5:43

most of our money lessons are caught, not taught.

5:47

We don't go through formal education. They don't talk about it in school. They

5:50

demonize it in the media and social media. They glamorize

5:54

it sometimes in social media and make it seem like, oh, get rich quick.

5:58

But they're not having real talk around real

6:02

money and around real life. That's part of what.

6:06

What the work is that I'm doing. The show, my. My new book,

6:10

building your money machine, is all about, is to open up the conversation.

6:13

Because here's what I know. Until we start to have a

6:17

conversation. Around money, like, really around money, what

6:21

is it? Why does it matter? Does it. Is it the thing

6:25

that's going to give you happiness? Short answer, no,

6:29

but is it the. Thing that's going to give you drive? Is it the thing

6:32

that's going to give you meaning? All those questions, and

6:36

then how does it work? How do you get money? How do you keep money?

6:39

What does it mean to build wealth? This is, number

6:43

one, is that if we're not talking about it, we need to talk about it.

6:47

In order to talk about it, it leads to number two, is we've got. To

6:50

ask ourselves, what environment

6:55

are we in? Who are we hanging around with

6:59

to make that happen? Because if we're living in an environment, if

7:03

we're surrounding ourselves in an environment

7:06

where most of the people are spenders, they're

7:09

in debt. And they're having conversations about how terrible it

7:13

is, how rough it is, and how they can never get ahead.

7:18

It's not going to elevate you past that. And so what we need to think

7:21

about is what pools are we swimming in? What environments are we

7:25

in? Are they nurturing? Are they growing? Are they challenging?

7:29

Are they creating uncertainty, fear, angst, lack?

7:34

And I'm not saying to eliminate those out of your life, just to be aware

7:38

of it so you can turn around and say, I want to go somewhere else.

7:41

I'm going to add to my environments, because sometimes you can't get rid of,

7:45

you know, family members and that kind of thing. But, but are we having

7:49

conversations about spending money or are we having

7:52

conversations around building wealth and having a meaning and,

7:56

and generosity and making a difference? They're

8:00

different. And they're going to spur a different. Element of

8:03

thinking, which is going to drive a different behavior, which is going to

8:07

drive a different money result. So that's number two. Number

8:11

three is they're playing

8:16

the payment game. So what happens is this, is that we start

8:25

to buy things or we start to make

8:29

spending decisions based on the monthly payment.

8:34

And marketers know this, especially

8:37

car dealers. They know this. And if they can get

8:41

you to commit to a payment, they can manipulate the numbers. So you

8:45

actually overextend yourself and you dont realize its little pieces of time. Its

8:49

that whole analogy of if you put a frog in cold water and

8:52

start to boil it, it doesnt realize that its getting boiled until its too late.

8:56

I know its a horrible analogy, but its the truth. And so what

9:00

ends up happening is. When we play the payment game, oh, its

9:03

only $100 a month. If you do only $100 a

9:07

month 1012 times, all of a sudden you're. At $1,200 a

9:11

month. The challenge with the payment game is.

9:14

What it does is it removes the. Friction from the

9:18

buying decision, which makes it easier for you to buy. That's why

9:22

a car dealer, a car salesperson, when you come on the

9:26

lot, one of the first questions they ask. You is,

9:31

what kind of payment are you looking for? Because if they know the payment, they

9:34

can, they can change the numbers. Now,

9:37

I negotiate a whole lot differently. And when they turn around and do that, I

9:41

remember the last time I negotiated, I said, I'm probably

9:44

going to pay for cash. But the bottom line is we're not talking about payments

9:48

here. And until I decide that I want a car, you and I

9:52

aren't going to have a conversation. So can I have some time to

9:56

go look. Now, I walked off lots because some. Of these

9:59

salespeople that are, they're, they're. Like parasites and they won't leave you alone.

10:03

Well, I, as a customer, ask them to give me space and time. And

10:07

if they're not gonna give me space and time, that means they don't respect me.

10:09

If they don't respect me, they don't. Get my money, means I walk out. Even

10:13

if they had the car. So, so. But the bottom

10:16

line is that when you start to look at payment games,

10:20

buy now, pay later, or zero

10:24

down financing or just credit card

10:27

financing, layaways, all those things are taking

10:31

and kicking the can down the road. But sooner or later, that math equation is

10:35

going to come home to roost. It has to work out.

10:38

Math is going to work out. So playing the

10:42

payment game is something. That the

10:45

wealthy or those that are. Moving towards wealth

10:49

know that they shouldn't be playing, because inevitably there's a cost to it.

10:53

Even when they say it's 0%, nothing is for free.

10:57

Zero, 0%, okay? It's not for free. Somehow they

11:01

embedded some compensation in there for them to actually

11:05

finance the purchase. So you need to be, be aware of it. So we're not

11:08

going to play the payment game. We're going to pay for things. We're going to

11:11

buy things and do things to the extent of cash. Now, some big

11:14

purchases like a car, we just got to do it right.

11:18

We have some rules around buying cars. How do you buy cars

11:22

or a house? Same thing. We have some rules around buying a house

11:26

so you don't overextend yourself to a point

11:29

where you can't do it. So. But by and large, we want

11:33

to. Buy things in cash as best we can.

11:37

Especially consumables. Especially

11:41

consumables. The stuff that is lifestyle, luxury

11:44

items. If we're financing our clothing, if we're financing our

11:48

vacations, if we're financing our. Daily living,

11:51

then what we're doing is. We'Re robbing from our future to live a life today

11:55

that we can't afford. Okay? So we need to be, we need to

11:59

be smart about it from that perspective. Number four

12:04

is we have no liquidity. What is

12:07

liquidity? Cash, okay? It's cash.

12:11

It's how much cash do you have

12:15

on hand? And the reason isn't to have cash

12:18

because people have said all cash is trash. You don't want cash because you're not.

12:22

You're going to lose money on inflation. And they're right.

12:25

However, it is important for us to have

12:29

liquidity. So we have peace of mind, okay?

12:32

When there's an emergency, if there's an emergency, and there will be. That's just

12:36

the, that's the way life is. Life will happen. And at some point you have

12:40

an unplanned expense, you have an unplanned health ailment, you have an

12:43

unplanned, you know, work interruption. You get, you know, laid off

12:47

or something. And if we don't have liquidity

12:51

to carry ourselves during that time,

12:55

we end. Up having to go into debt, which means that

12:59

instead of building the mountain we're trying to build, we're digging a. Hole

13:02

to get out of. We don't want to do that. So we want to have

13:06

liquidity for a few reasons. One, peace of mind. Two, so

13:09

we can take care of any emergencies. Three, so we can sustain

13:13

ourselves during any kind of prolonged

13:17

downturn, or health challenge, or relationship

13:20

challenge, or work challenge in that way. And then

13:24

the other reason we want it is because there may be opportunities

13:28

to buy. And if we have liquidity and cash to buy, we

13:32

can negotiate much, much better. I did that with a house. I

13:36

did that with my car. I do it a lot with that. So we want

13:39

the liquidity to put us in a power position to make

13:43

that happen. And so over

13:47

time, we want you to do that. I want you to use the wealth priority

13:50

ladder, which is in the book, and I explain it in detail in the book

13:54

and in my trainings, so you understand what to

13:57

do to make that happen. Number five.

14:01

Number five is, is being house

14:04

rich, okay? Cash

14:08

poor. And what I mean

14:11

by this is. That putting too much into a

14:15

house. Now, I just had a conversation with. Someone that

14:19

said, I don't think that. I'm ever going to be able to own a house.

14:22

And I asked the question, is there. A reason you want to own a house?

14:26

Well, it's the american dream. Well, I asked the

14:29

question, is the american dream your dream?

14:34

I never thought about that. I just thought I was supposed to own a house.

14:38

Oh, no, no, no. I don't care what the american dream is.

14:42

I want to know what your dream is. There's no necessity that says

14:45

you have to buy a house. There's no necessity that says you have to own

14:49

a house. Is it a good investment? Well, from a pure

14:53

investment standpoint, no, because it costs you money. It's not truly investment.

14:57

It's a place to live. You're paying a mortgage, there's cost

15:01

to upkeep it. Okay. Does it go up

15:05

in value long term? Typically, real estate does. Is it

15:08

a good investment? Only when you're ready to sell it. There

15:12

are other investments that are more liquid and more appropriate. And

15:16

the challenge is, if we overextend. Ourselves with our

15:19

housing, okay, if we. Overextend ourselves with our

15:23

housing, we have no cash to live. We have no cash for anything else. We

15:26

have no cash for liquidity, we have no cash to get out of debt, and

15:30

we are just barely making ends meet. So we have to be really smart about

15:33

it. I look at your housing costs. Total housing costs

15:38

need to be less than 30% of your income.

15:42

Less than 30% of your income. If it's beyond 30%, you're starting to

15:45

tiptoe towards. Towards being overextended.

15:49

House rich, cash poor. Okay. Leads me

15:53

to number six. And number six

15:57

is separating effort

16:02

and earnings. This is the whole premise

16:06

of my book. Building your money machine is for you. To understand

16:11

how to separate your ability. To

16:15

earn from the efforts to earn it. The challenge right now is that

16:18

most of us, in order to earn money, we have to go to a job.

16:22

We have to go to the business. We have to run on the treadmill, and

16:24

we got to run on the treadmill. And the fact is, and I came out

16:27

of that space, I'm an accountant.

16:31

We sold hours. So unless I was churning the hours, I

16:35

wasn't making money. Unless I was on that treadmill, I wasn't making

16:38

money. And if I wanted to make more. Money, I had to run faster, longer.

16:42

Harder on the treadmill, y'all. Sooner or later, something

16:46

breaks down, something burns out. We can't go. We hit a

16:50

ceiling, we hit a cap. And so

16:53

what we need to look at is how do I separate

16:57

my. Efforts to earn the money from the earnings

17:00

itself, hence the money machine. Okay,

17:04

yes, I earn money by doing. Things, my efforts,

17:08

but I also create things, assets. I buy things,

17:12

assets that generate income without my

17:15

efforts. The book I spent a lot of. Time creating,

17:19

but it's going to be. Selling for the next decade or more,

17:23

making money, okay? Changing lives, helping

17:26

you, like, the path to financial freedom, to give you the tools, the tactics, the

17:30

strategies, it's going to be a game changing book. So it's

17:34

going to be there for a while. But I did the effort once, and now

17:37

it goes on, okay? Investments, real

17:41

estate, rental properties, you know,

17:46

there's cash flow. It takes a lot less effort once you're in it and it's

17:50

working. Other investments, portfolio investments

17:54

like stocks and bonds and index funds and ETF's,

17:58

all of those things are going to give you income

18:02

without as much effort. And the more that we can reduce. The effort to

18:06

earn, the more we have time

18:09

to live our lives the way we want to.

18:13

So those that are wealthy, those that are rich start to understand,

18:16

and they know that at some point, they have to look at how do

18:20

I separate my efforts to earn money with the actual earnings

18:24

itself. And the way to do it is to build a money machine.

18:27

The number seven. Number seven is

18:31

about leverage, but not

18:35

leverage in the way you think. I'm not talking about debt

18:38

leverage, but it goes back to separating

18:42

effort and earnings, too. But leveraging

18:46

assets to create earnings without. Your

18:49

effort, but also leveraging. Team.

18:53

See, anything that gives us time back

18:57

is going to is leverage.

19:00

Anything that gives us effort back

19:04

is leverage. So I want to look for

19:07

ways that I can generate my

19:11

income with less effort or less time. And

19:14

so I am talking about leveraging

19:18

assets, team, and time. Okay? And when

19:22

we do that, we get it back to do it for, use it for other

19:25

reasons. Which leads me to number eight,

19:29

and. That is. Knowing your value.

19:39

This is a big one. It's a big one of

19:43

not knowing your value. And if we truly

19:46

want to start to leverage things, first things first.

19:50

Value yourself. Value yourself.

19:54

Okay. We tend to not ask

19:58

for our value. And the value isn't in our

20:02

hours. The value is in the solutions that we create

20:06

or that we provide. The tendency is to do a math

20:09

equation to say, well, I work 40. Hours, and there's my hourly rate,

20:13

but. In that 40 hours, what's the solution you

20:17

provide that can create value

20:21

in the hands of the folks that you're working with?

20:26

This piece, number eight, is about you

20:30

owning your value. To look at yourself and say,

20:34

I. Actually am valuable, and I'm valuable to. This

20:37

extent, and I'm not going to reduce my value, and I'm going to

20:41

own it with conviction. Okay? Number

20:45

nine. This one. People

20:49

wish it would go away, but. It won't go away. Taxes.

20:54

There's two systems, okay? There's two systems of tax

21:01

systems. One, and it's not a tax system for the

21:04

rich and a tax system for the poor or the

21:08

middle class. That. That's not true. We all have the same

21:12

tax system. We all have this access to the same tax system. But when I

21:16

say two tax systems, it's the tax systems for

21:19

those that. Are employees and

21:23

those that are business owners. Because an

21:26

employee pays for all their expenses

21:31

after they pay their taxes, so. They get their paycheck,

21:34

and after they. Take that, get their paycheck from their paycheck they get, let's

21:38

say they get gross pay of $2,000, but

21:42

the net check they get is like $1,500. So there's a $500

21:46

difference. Where did that go? To pay taxes.

21:49

So right out of their paycheck, they pay taxes first. They have

21:53

$1500 net

21:57

to spend, to. Pay for their mortgage, to pay for their car payment, to pay

22:00

for expenses. And to pay for all those things. But a

22:04

business owner, they make the money, they pay their

22:08

business expenses and. They pay

22:11

tax on the net. So they actually have the opportunity to

22:15

pay for things before tax. So for instance, if they

22:19

use the car, the vehicle for business use, instead of

22:23

paying it after the taxes, they can pay a portion of it from the

22:26

business, get a tax deduction for it and reduce their

22:30

taxes. Understanding the two tax systems, those

22:33

for investors and business owners and those for

22:37

employees and using it effectively is

22:41

really important to move you towards

22:44

the richer side of things. Number ten, and most of you

22:48

probably heard this, is multiple streams

22:52

of income. Multiple streams of income. And here's the thing here,

23:00

and I do think that we want this, but we want multiple

23:03

levels of income to the level of effort

23:07

to generate the income. And the less we are

23:11

dependent on a single strand of income,

23:15

the less risk we are to losing our wealth, losing our way

23:18

and losing our income. Now here's a

23:22

caveat here. You need to

23:26

start with one stream of income. You

23:30

need to get that running fast and furious.

23:33

You need to get it rolling really well before you

23:37

start to try and develop another one. The tendency might be to

23:41

try and try and create three or four streams

23:44

of income at the same time. And none of them will work because you're

23:48

not focused enough to give it the attention that's necessary.

23:52

So get one income spinning. Well, that's like you're

23:55

spinning plates. Get it spinning. Well, first, before you

23:59

go spin another one. Okay. But over time,

24:03

I want to make. Sure that you have multiple streams of income.

24:07

All right, last two. Number eleven

24:10

is not tracking

24:14

your numbers. Okay,

24:18

not tracking your numbers. Now, one of the numbers I want. You to track

24:22

is your net worth. But here's the thing, I get it. Some people

24:26

say I'm afraid to look at what it looks like. I don't want to know

24:29

what it. Looks like, and you know,

24:33

I get it. But until you're willing to look it in

24:37

the eyes, look it in the face, until you're willing to get real with

24:41

your current reality, we can't move you from there. Not about judgment, not about blame.

24:45

I don't care how bad the decisions you think you made in the past. They'Re

24:48

in the past. We're going to make new ones. I'm going to equip you, I'm

24:52

going to empower you, I'm going to educate you, I'm going to support you, I'm.

24:54

Going to guide you, you're going to. Make new decisions, you're going to end up

24:57

with new results. Now, I'm not saying that it's easy.

25:01

Depending on where you're at, but it will be simple. And we do that. Right.

25:05

So tracking our numbers so we know where we at, where we're at. Tracking

25:08

our numbers so we know where we're going. Tracking our net worth is a

25:12

huge thing that most wealthy people are doing on a regular basis. And

25:16

the last one is this. Number

25:19

twelve is making investing

25:25

a priority. And here's what I mean by this. Making investing a

25:32

priority is that if you

25:35

don't, if you don't do this, here's what

25:39

most people do, okay? Most people

25:43

are making money

25:48

spending money. On their lifestyle and on

25:51

living. And then they look at what's left and they take what's

25:55

left and they invest that. They

25:58

create their financial future on whatever's the leftovers.

26:02

The problem is that investing isn't a priority in that equation. And what

26:06

you're really doing is creating a future on the scraps.

26:09

And there may be some months where you have a lot left over and there

26:13

may be other months where you have no leftover. And so it's

26:17

hit and miss. And you wonder why you can't get ahead. Well,

26:20

because it's not a priority to get you ahead. And

26:24

in order to do this, what we need to do is flip it. We make

26:27

money, we invest first, we.

26:31

Allocate that, that 20%, 25%

26:35

towards our future. And if you can't get to 2020, 5%,

26:38

start where you can. Maybe it's 5%, we increase it to six, to seven,

26:42

but the target is 20% to 25%. But more

26:46

importantly is that you're creating the habit that it is the priority. And you sit

26:49

back and say, I'm. Going to invest first, and then I'm. Going to spend

26:53

the rest on my current lifestyle. And you might

26:56

look at me and say, mel, if I did that, I couldn't pay my bills.

27:00

Well, now we have the real question.

27:04

Now we have to look at not only what your bills are,

27:08

but now let's examine the income that you're bringing in. How can

27:12

I increase my value and increase the flow of income

27:16

so I have enough to support my investing as a priority and my

27:19

lifestyle, but we. Dont forsake our

27:23

financial future for a. Present that

27:27

I cant afford. All right? So I hope that this makes

27:31

sense. These are the twelve things that, when I look at it, when

27:34

ive worked. Over the decades with folks

27:38

that are. Moving from wherever they are,

27:41

middle class, even below middle class, and moving

27:45

into the rich realm or the wealth

27:49

realm or the financially free realm, these are the twelve things.

27:52

Okay? They're talking about money. They change their environment

27:56

and they make sure they surround themselves with people that are going to challenge them,

27:59

grow them and help them. They're not paying the payment

28:03

game. They're building liquidity so they have safety

28:07

and opportunity. They're not worried about being house rich

28:11

and cash poor. They find a way over

28:14

time to. Make sure that they separate their effort from

28:18

their earnings. They leverage assets, time and

28:21

team. They own their own value.

28:25

They understand how to use the tax system to their advantage. They

28:29

develop over time, multiple income streams. They're tracking their

28:33

numbers and they make investing a priority. I hope

28:36

that you use this as. A checklist and you start to look at things and

28:40

say, how can I make each of these happen? Because when you do now, all

28:43

of. A sudden you move from wherever you're. At, whatever the age

28:47

or stage you're. At, towards the path to financial

28:50

freedom. And the richness you deserve. And know that I'm with

28:54

you every step of the way. I truly believe that financial freedom is your

28:58

birthright. We just have to go claim it. All right. I hope you found this

29:01

of value. If you have any questions or anything or comments, do me a favor

29:05

and let me know. Let me know. Reach out to me. Post it below.

29:09

Let's have the conversation. Let's start the money talk here. Let me

29:12

help light the path to financial freedom for you

29:16

until I get a chance to see you in another episode or on the road

29:19

as I. Speak, or maybe on one of my lives.

29:23

Always strive to live a life that outlives you.

29:27

Here's.