2009 will be the year that separates the Millionaires … In Training! from the wannabe’s …

… the year to put up or [you know what]. There are bargains to be found that will fuel every Making Money x01 stage, but there will be just as many naysayers who will try and hold you back.

That’s when the real ‘players’ amongst you will pull out the old Aussie favorite by Joe Dolce and say:

What’s-a matter you, hey, gotta no ambition?
What-a you t’ink you do, try to hold me back?
It’s-a not so bad, right time-and-place
Ah, shaddap you face

2009 … a once in a lifetime opportunity. Take advantage of it 🙂

I am constantly asked by friends and family if I’m bored …

… you see, they assume that because I’ve stopped work that I am ‘retired’ – a word that is (statistically) only a few months or years removed from ‘death’ (real, not metaphoric).

What they don’t realize, is that I have retired from full-time, traditional work to LIVE … to, live my Life’s Purpose.

Selling my business was merely the first step, writing this blog was the second step … fate will dictate the remaining steps, but I have a general direction in mind.

The problem is, I haven’t told anybody (other than my wife, my children, a couple of VERY close friends who don’t even know the name I write under, and all of you) about my blog or the direction this is all heading … I guess they’ll find out if/when the book is published 😉

In the meantime, I chanced upon the sketch, above, and suddenly see myself in their eyes: to them, I’m insufferable!

I’ll have to make up a ‘hard working’ cover story pretty soon 😛

If you’ve been following this blog for a while, you will know that I am an Australian living in the USA … right now, as I write this, I am in Australia and will be back and forwards between the two countries.

It’s a long trip, and it gets hard writing these blog posts upside down when I am in Aus 🙂

So, after a bit of a break, posts will now continue for the remainder of 2009 as normal … and, as usual, I will look forward to your comments, criticisms, and contributions!

I wrote a post about the habits of the rich; it was really just an excuse to show a video interview of the ‘rich v the poor’ by Michael Moore that I thought was quite funny.

However, my take on this video drew some sharp criticism, so I countered with some comments by Prof. Thomas J. Stanley  (author of The Millionaire Next Door and The Millionaire Mind) in a later post. To which Jeff said:

I’m only a couple chapters into the book but my big take away thus far is that being a moral person of high standards who owns and invests in their own business has been a key success factor. This is similar to the tone you take here at 7M7Y and one I’ve seen espoused in other books (e.g. “Get Rich, Stay Rich and Pass It On”).

Well, my experience is actually a little different to the findings put forth by both books – The Millionaire Next Door and Get Rich, Stay Rich and Pass It On – which, each in a slightly different way, are both attempts to interview wealthy families and ‘codify’ their findings into whatever the authors believe is the ‘true path to riches’.

As I replied to Jeff:

Just because that’s how MOST made their money, doesn’t mean that it’s the BEST way to make YOUR money … that’s what we want to talk about here. Of course, the Millionaire Mind does lay down some useful groundwork.

By the way, the ONLY thing that I found useful about “get rich, stay rich, pass it on” is their Benchmark (even that, I have some disagreement over … for example too much of these millionaires’ net worth is tied up in their personal real estate (home, second/third homes, etc).

Also, the book’s authors appear to have confused CAUSE with EFFECT:

Because so many millionaires have made their money in business, their conclusion is that if you are rich in some other way (say CEO, professional, consultant, etc.) and want to pass your wealth on to the next generation you should then buy or start a ‘real’ business … poppycock!

Now this might sound confusing, because – on the surface – we seem to be saying similar things, as Jeff observed:

Maybe I’ve misunderstood your philosophy. I read both 7M7Y and 7MIT and have used your methods to try and determine my own number. Through that process I have come to the conclusion that owning your own business is one of the best ways to achieve the necessary compound growth required to achieve my number.

So, now we get to the crux:

Making Money 101 : Business = Too Early

Making Money 201 : Business = Good

Making Money 301 : Business = Bad

Firstly, let’s understand why, then I’ll point to some exceptions that I believe actually confirm my rule:

Owning a Business As A Making Money 101 Strategy

Many people do, and by default you may find yourself in this situation … but, it’s very high risk: if you are in business AND in debt, with poor financial ‘housekeeping’ then you really are at the mercy of luck and circumstance … a business failure will simply wipe you out.

Unless you’re planning a very low cost part-time business as a way of helping you supplement your income – for the sole purpose of paying down debt, increasing savings, etc. – then I would recommend that you keep your ‘day job’, and get your financial house in order before plunging into a business of any kind.

Owning a Business As A Making Money 201 Strategy

This is all about increasing income and rapidly building up your net Worth … owning a business can be ideal (for some) for both objectives.

Of course, owning a business is generally well-understood as being a risky undertaking; but, as Jeff points out, the right business can have such a great return that it (a) justifies the risk and, (b) can help you achieve a large Number … relatively soon.

My advice is that you only undertake such a venture (and, adventure!) if you can stomach the roller-coaster ride that is inevitable.

What the Millionaire Next Door talks about is actually quite different: it finds that most millionaires are those who have held onto a boring business for a long, long time, tightened their belts quite a bit (cheap houses, cars, suits and liquor), thus building up a fortune very slowly, over a very long period of time …

… which may or may not suit your Number/Date requirements … or, your temperament!

Owning a Business As A Making Money 301 Strategy

This is all about maintaining your pre-retirement income after you stop working, while also maintaining your Net Worth … owning a business can be destructive of both objectives.

Yet, through comparing families that own great businesses with those that sold out, the authors of Get Rich, Stay Rich, Pass It On erroneously and dangerously conclude:

1. That you need to KEEP a business in order to maintain your wealth through both your retirement and the next generation/s, and

2. That if you don’t already have such a business you should go out and find one; and, not any boring, old business of the Millionaire Next Door type, but a high tech / high growth business of the 7 Million 7 Years type!

That is the surest way to put your hard-earned retirement at risk; because they recommend having 1/3 to 1/2 of your retirement net worth in such a high risk enterprise …

… haven’t the authors ever heard of ‘business failure rates’, ‘credit crunches’ and ‘tech crashes’ ?!

So, my strategy is very simple:

By all means have your high growth / high risk business when you are starting your journey and have time to fail and recover … just in case you aren’t wildly successful the very first time you try 😉

Then, if the business has ‘matured’ to the point that you are certain that you can leave it ‘safely in the hands of others’ (as I have for one of my businesses) to run for the next 100 years without you … then go ahead.

But, I would still prefer if you sold it and invested the money elsewhere … and, would certainly ask you to have your head read before you even consider buying / starting a high growth / high risk business in retirement (except as a ‘hobby’ using very small amounts of your own money, as I am doing).

The exceptions may be if you decided to buy a franchise or two (under employed management … unless living your Life’s Purpose involves you owning/managing such businesses yourself) or a car wash or other more ‘passive’ business purely as a potentially higher-returning ‘semi-passive’ investment, say, as an alternative or adjunct to a real-estate holding – if you happen to fee so inclined.

That’s the 7 Million 7 Year Strategy … what’s yours?

This blog is called “How To Make $7 Million in 7 Years”.

How.

Not “Why”.

Not “I made $ 7 Million in 7 years so nyaaahhh!”.

But, how you can make $7 Million in 7 Years.

It’s written from the point of view of a pretty ordinary guy who went from worse than you ($30k in debt) to financially better than you (most likely) … and, who happens to believe that there is a ‘system’ to making money that you can follow.

Not some secret “buy my $10,000 course on how I went from broke to millions [insert method of choice: flipping real-estate; gambling on stocks and options; buying tax liens/gold/silver; or even futures trading]” but, a ‘system’ – or roadmap, if you prefer – nonetheless.

And, I want to share that system here and at my sister site 7 Millionaires … In Training! where you will even get to participate (or just follow along) as 7 ordinary folk actually do make their own millions over the next 7 years.

No catches … no schemes … just good ol’ fashioned financial advice.

Hell, I won’t even take advertising, let alone ask anybody to pay me a penny, through either of these sites!

So here is the how, but I warn you …

… you’re not going to like it.

Because it begins now … with finding Your Life’s Purpose.

You may wonder what all this New Age crap is all about, and what it has to do with making serious money?!

“Finding your Life’s Purpose” sounds like something that you would more likely find in The Secret more than in a ‘serious personal finance blog’ 🙂 such as this one?!

And, it’s true … while I don’t hold much store in the idea of “Visualize your way to Abundance” mantra …

[AJC: after all, why restrict yourself to a few measly million bucks, if you can just as easily visualize your way to $5 Billion AND feeding the world, putting an end to all wars and sickness, and reversing global warming … all before lunchtime?]

… I do like the idea of starting a journey with a clear idea of your destination.

Building personal wealth is like sailing a huge cruise liner … those things just don’t steer all that damn well!

So, you had better have a good idea of where the final destination is well ahead of time, so that you can:

a) Choose your ship – Long journey? Short hop?

b) Identify your likely route – In harbor? Open ocean?

c) Prepare for the worst – Mild chop? Ocean swells?

In personal finance terms these translate to:

a) Your Number: $1 Million? $10 Million? and Date: 20 years? 5 years?

b) Job + 401k? Business + Investments?

c) Interest rates? Market cycles?

It’s only if you know how your Number/Date combo. lies on the Small/Late to Large/Soon continuum that you can begin to select optimally from a), b), and c).

So, I found that setting my destination – my Life’s Purpose – was the catalyst that drove me from also-ran small-business owner to real-estate magnate and multinational entrepreneur.

Once I knew that my Number / Date was rammed so damn far along the Bloody Large / Impossibly Soon side of the scale, that I was literally forced totally out of my comfort zone into (eventually and not without significant risk and trauma) a totally new one!

Understanding my Life’s Purpose ‘scared’ me into massive action – and, as we know massive action breeds incredible results – which is exactly what my doctor ordered 😉

So, if you are now totally driven to find Your Life’s Purpose, here’s how to do it; a simple 6 step program first taught to me by Michael Gerber of E-Myth fame:

1. Whet (wet?) your mental whistle with a few well-chosen questions.

2. List the things that you don’t want in your life.

3. List the things that you do want in your life.

4. Break the (always self-imposed!) barriers in your life.

5. Write your rear deck speech (really!)

6. Wacko Jacko … Presto … 48 hours later: Your Life’s Purpose.

Easy … perhaps, but not quite as as easy as it sounds. Profoundly financially life-changing … absolutely!

Even for a cynic like me ….

… maybe it will do the same for you?

A while ago, I took a risk on this blog … I gave some potentially risky, dangerous, damned GREAT advice!

I suggested – controversially, I would think – that college-age kids should skip Making Money 101 (you know, the standard “save your money, buy some mutual funds” and so on steps) and start to find ways to create new money …

… and, the BEST way that I know how to do that is by starting your own business!

And, the best kind of business for college-age millionaire-wannabe’s to start is an internet business (but, any business will do … even a car wash). But, I’ll let you read that post to find out why …

For now, I want to answer this question from Josh:

Would you suggest someone in Alex’s position to possibly skip college and just work on money making 201, saving years that would be used on Money Making 201 activities? Sometimes I think this is what I should have done.

Well, you could – and, I know of others who would suggest that since there’s more money to be made in business than in college, why not skip those years altogether and avoid the wasted time and loans?

But, what if you don’t succeed with the business/es (I did suggest that you plan on at least a couple of failures)?

Well, if you skipped college, that would have been high-risk advice from me …

…. but, since you took my advice and STAYED IN COLLEGE the business failure/s didn’t change your life … my advice only changed how you spent your time and your money during college: instead of drinking and partying – as much 🙂 – you ‘played’ at business and learned something and PERHAPS even become a millionaire in the process!

What could be wrong with that?

But, where’s the benefit (besides the obvious learning experience and the lack of damage to liver and brain cells that would have no doubt occurred if you had chosen the party-and-drink-your-way-through-college-route)?

Well, while you were hunkered down working on your various businesses, you were actually learning some very valuable Making Money 101 lessons in disguise!

Even though I told you to skip Making Money 101, you were actually (by necessity) learning the most valuable Making Money 101 lesson of all: delayed gratification.

Assuming that you followed the strategy that I outlined in my earlier post you kept:

… living like a penniless college kid, mooching off family and friends like any ‘normal’ college kid does, while you’re busy investing 99% of what you earn.

This is invaluable advice (even if I do say so, myself). Why?

Because, in the event that Plan A failed, and your businesses do not make you rich while you are still in College – or at least get you started on the path – you are well-placed to move straight into Plan B:

Graduate!

That’s it? Well, not quite ….

Because you have just become a Frugal Graduate: while most of your peers are already on the path to credit card debt, consumer debt, car debt, and all sorts of bad spending habits you are still in the habit of NOT spending (and certainly not borrowing, unless it’s for your latest venture) money.

So Plan B is simple: Graduate, get a job, and keep living like a College grunge as long as you can possibly can.

You hold out and invest 99% of your money, then 98%, then 90%, then 80% …. but you refuse to buckle at anything less than investing 33%, and only then after a long-and-hard-fought battle against the tide of consumerism that is inevitably going to wash over you.

You keep investing that money in a mixture of real-estate, stocks, and more small businesses (if you have the stomach to keep trying after failure-upon-failure, since this is the ‘worst case scenario’ Plan B) and …

… repeat until rich!

Under this strategy, wealth will come, but I cannot predict the time frame: that is a function of how long and how well you hold up against the tide of consumerism and how fruitful your investments (particularly your businesses) turn out to be.

But, I can tell you this: if you are starting college now, or soon … this is the only financial advice that you will ever really need (conventional wisdom and mom-and-pop financial advice be damned!) …

… if you have the guts to go with it, and the stamina and foresight to stick with it.

And, the rest of us who are already too old, can simply envy you, because time is more valuable than money.

Actually, not more, but the same … this time of YouTube.

BTW: This ‘top secret magic code’ that the product will tell you about if you are stupid enough to buy it is none other than Google’s Adsense!

How do I know … well, d’uh … common sense.

PS if it’s NOT Google Adsense (or Adwords) send me an e-mail with proof of what it is and I’ll send you a gift.