5 Secrets Of Self-Made Millionaires

Posted on June 14, 2010 by Adrian

I’m a voracious reader of anything that purports to teach you how to be rich … when I needed to learn, I read everything hoping to find ‘the answer’ … and, after I made it, I continued reading (but, I must admit that I am more discerning now) mostly out of curiosity (to see what others are saying).

In both cases, I was almost invariably disappointed … hence this blog.

But, I was pleasantly surprised to read an article with a [groan] headline: 5 Secrets of Self-Made Millionaires …

… it’s actually not that bad. Not rocket-science, but not anywhere near as bad as most similar articles and books are.

Here are the 5 ‘secrets’ and my take on each:

1. Set your sights on where you’re going

T. Harv Eker, author of Secrets of the Millionaire Mind [another groan] says:

The biggest obstacle to wealth is fear. People are afraid to think big, but if you think small, you’ll only achieve small things.

Wanting to be wealthy is a crucial first step.

I obviously agree; if you don’t understand why, you must be a new reader [Hint: It’s to do with discovering your Life’s Purpose and Your Number / Date]

2. Educate yourself

You’re reading this blog post … and, I wrote it, didn’t I? ‘Nuff said 🙂

3. Passion pays off

See 1. above … ZZZZZzzzzzzzzzz

4. Grow your money

Well, d’uh!

But, Loral Langemeier, author of The Millionaire Maker, adds something sensible:

The fastest way to get out of that pattern [the never-ending cycle of living paycheck to paycheck] is to make extra money for the specific purpose of reinvesting in yourself.

[AJC: I would delete the last two words, which are hokum; it doesn’t cost much to “reinvest in yourself” except time … for example, this blog is FREE].

I like this part [AJC: I bolded the part that I like the best … I like it, because I did it, too; that’s how I raised the capital to expand to the USA i.e. from profits left in the business]:

A little moonlighting cash really can grow into a million. Twenty-five years ago, Rick Sikorski dreamed of owning a personal training business. “I rented a tiny studio where I charged $15 an hour,” he says. When money started trickling in, he squirreled it away instead of spending it, putting it all back into the business. Rick’s 400-square-foot studio is now Fitness Together, a franchise based in Highlands Ranch, Colorado, with more than 360 locations worldwide. And he’s worth over $40 million.

I also like:

If you want to get rich, you need to pay yourself first, by putting money where it will work hard for you—whether that’s in your retirement fund, a side business or investments like real estate.

5. No guts, no glory

If there’s any one secret in all of this, it’s this one:

Iif you are a timid mouse (like me), you either have to learn to roar (like I had to) or learn to live with a Small Number / Never Date.

Getting the Life’s Purpose ‘religion’ is one way to put the fire in your belly … it worked for me.

Oh, and they leave the best secret to last (at least the author feels it’s the best), which is funny because this would then be Secret # 6:

The Biggest Secret? Stop spending.

I agree with everything AFTER the ‘?’ above 😉

If you don’t have the money to invest, don’t spend … it’s simple!

But, I don’t agree with this:

Every millionaire we spoke to has one thing in common: Not a single one spends needlessly. Real estate investor Dave Lindahl drives a Ford Explorer and says his middle-class neighbors would be shocked to learn how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why anyone would buy bottled water. Steve Maxwell, the finance teacher, looked at a $1.5 million home but decided to buy one for half the price because “a house with double the cost wouldn’t give me double the enjoyment.”

Don’t believe that Millionaire Next Door cr*p; some multi-millionaires are frugal – even some Billionaires (most notably Warren Buffett) – but, don’t be fooled into believing that’s the majority of multi-millionaires:

I have a friend who works for a 35 year old Russian immigrant who is now a hugely successful hedge fund manager (yes, he’s survived the GFC as far as I know. I’ll check when I’m on Safari in South Africa with my friend later on this year); my friend overheard him explaining to his daughter that he was going to take the family jet to a business meeting, so she would need to fly on a commercial airliner with her mother to get home from their vacation.

This is what he said to his daughter: “You know that there will be people you don’t know on that plane” … at 8 years old, she had never flown other than by private jet!

Another friend works in MLM and had breakfast with that company’s # 1 distributor – a nice, young lady. She receives a $600,000 check every month. She just bought a mountain in Colorado and a special tractor, so that she could grade her own private ski run.

I hope she puts a lot aside for a rainy day; gives overly generously (money and time) to charity and those in need; and, joyfully spends the rest!

I have a simple rule: spend freely, when it doesn’t make sense not to.

Think about that, and let me know what you think it means …

Would you donate your last penny?

Posted on June 7, 2010 by Adrian

They say that the will to give – to donate – generously is governed by a gene.

For those readers in – or approaching – MM301 (i.e. you’ve made your millions, now you are struggling with what to do with it), I want to test that gene to its fullest, by asking you a question:

Would you donate your last penny?

I can honestly say that I would not …

Which brings me to a related topic: it seems that many people who come into money take a chunk of it to donate. Perhaps to have the wing of a school named after them, or to do some other ‘good works’.

Whether the sum is $1,000,000 or $100,000 or $10,000, when donating what you consider to be a large sum, think about what you are really donating; you are not merely donating $1,000,000 (or $100,000 or $10,000), you are donating the future value of $1,000,000:

Let’s say that you plan on living for another 40 years, and you can invest your money at 5% above inflation, then the real value of your donation is not $1,000,000 but more than $6.7 million!

[AJC: if inflation runs at 4%, and you can get an average return of 9% over 40 years your $1 million will grow to almost $29 million, but inflation takes away a huge chunk of it!]

When thinking about donating that $1 million [AJC: The Cartwood Family Wing does sound tempting], I’m not really thinking too much about that $6.7 million [AJC: or, $28.8 million … ounch!], I’m actually asking myself:

Would I donate my last $1 million?

You already know the answer to that 😉

But, why?

If all goes belly-up in my financial life, I really may have just given away my last $1 million … in other words: if I lose $6 million, I am now broke (since I already gave away the 7th million of my 7m7y).

That’s why I would never donate a lump sum … instead, I would invest that $1 million for the benefit of charity. Further, I would not even pledge the capital or the income stream in advance, I would simply make the requisite donations annually and anonymously.

It may not get my name ‘in lights’ [boo hoo]; it may not help the charity with capital acquisitions; and, it may not be the most tax-effective method of donation (compared to, say, charitable trusts and the like), but it will help both the charity and me, long-term:

1. The chances are that I can invest $1 million far better than the people running the charity can [AJC: after all, I’ve made 7m7y]

2. It’s likely that the charity – or, some other equally worthy casue – can use $6.7 million more than they can use $1 million, albeit spread over 40 years; but, I admit that I’m just making a wild guess that the world will need philanthropy for at least the next 40 years.

3. If all goes belly up, and I end up becoming the one in urgent need of ‘charity’, I can ‘donate’ my last million (at least the income thereof) to myself and my family.

4. When I die, if I feel so inclined, I can finally donate either the asset or the income stream (or both) to the charity as I will no longer require it as insurance for myself. On the other hand, I may choose to pass it on to my family and let them decide.

I guess nobody will be talking about “AJ Cartwood, the great AustraloAmerican investor, raconteur, and philanthropist” … at least, not during my lifetime 😉

What would you do with $5 million … or $50 million?!

Posted on April 18, 2010 by Adrian

Even if you are NOT a poker fan, scroll forward to exactly the 5 minute mark (once the video has had a chance to buffer) to hear Kara Scott ask some poker young – and, old – guns what they would do with $5 million (or, $50 million) …

… you might be surprised how little it seems to mean.

But, if I asked you the same question, you would [AJC: I hope by now] instantly answer:

That’s easy, I would [insert: Your Life’s Purpose]!

But, if you want to understand why these guys are seemingly so relaxed/flippant about $5 million (or, even $50 million for a couple of them) you first need to realize that the question actually means: “what would you do with another $5 million?”

So, it shouldn’t surprise you that my answer would equally be:

Nothing special …

… it would simply make me a little more comfortable that I could live my Life’s Purpose, since I’ll just buy another $5 million of [insert Perpetual Money Machine of choice: 100% paid for by cash real-estate; annuities; TIPS; bonds; etc.; etc.] and live off 75% of the net proceeds.

The Formula For Wealth!

Posted on April 15, 2010 by Adrian

Oops, I made a couple of mistakes, and one of the millionaire ‘success factors’ that I believe in is to admit your mistakes, make restitution as best you can, and then move on.

My first mistake was taking a hot chilli from one of the tradesmen working on my house; I told him it was fine, but a minute or so later (when I was already in my car on the way home) it really hit and I was suffering for another 10 or 20 minutes. I decided that appropriate Restitution for this one was simply the embarrasment of ‘coming clean’, so I had to go back and tell him I’m not a real man, after all 😉

My second mistake was making a promise to the 7million7years who applied (and, were accepted) for my new 70 Millionaires … In Training! program that resulted in me (a) reducing the number of Foundation Members to 40 (was meant to be all 70) and (b) charging them $1 a year (it was meant to be totally free for life). We agreed that appropriate restitution was to donate $5 to a worthy charity for each Foundation Member ($5 x $40); I decided to do it for all 70 charter members (Foundation Members, plus full paying Premium Members) hence the receipt, above.

You gotta admit your mistakes and keep your promises …

__________________________________

The 7million7year approach is not to measure wealth by the amount of money that we have, or some arbitrary sum that we might wish to have, or even some really complicated ‘secret formula’, but to measure wealth by this simple formula:

Where RequiredAnnualIncome = f { LifePurpose }

[AJC: which simply means that your Required Annual Income is some Function of Your Life’s Purpose i.e. they are -or, at least, should be – totally related!]

You are wealthy, in 7million7year terms, when:

“Wealth Factor” Wealth < 1

Or, you can just go by Ill Liquidity’s formula:

Let E be earn and S be spending. If E E QED. The latter part of the statement is redundant. What about “if you can finance it you can own it?”

I finance therefore I can? 😛

Casting Call: 70 Future Millionaires Wanted!

Posted on April 6, 2010 by Adrian

So far, this blog has covered – in a random way – perhaps 10% – 20% of what I have to offer, and over the next 2 years you can expect that to double again … so, if you can wait 4 or 5 years (and, can unscramble the order that I deliver this content in) you will know at least half of what I have to offer.

IF you can wait …

But, now I am offering another way to learn what you need to learn – quickly and in a totally ordered/guided way – AT NO COST TO YOU … NOT NOW … NEVER … EVER … really 🙂

Why?

It’s another way for me to share my ideas … and, more fuel for my next book [AJC: my first one is finished and is being hawked to publishers and agents as we speak] 😉

So, what’s this all about?

If you have been around – reading this blog – for the past two years, you will already know about my Other Site, which was host to a unique online experiment where a real multi-millionare (that would be me) offered to mentor just 7 people to make their own fortune.

Scott, Ryan, Josh, Debbie (who volunteered to leave the program to help me write a book about their experiences with this experiment), Jeff (who replaced Debbie), Diane, Mark and Lee (a retired Police Chaplan!) all participated and you can read about their experiences on that site.

If you are a regular reader of this blog, and meet a couple of very small criteria, ALL of this content is – and, will always remain – free to you!

But, I am offering you even more .. also for free / for ever …

You see, I am opening up this site to just 70 more Millionaires … in Training! and, will be offering memberships to qualified applicants for a small monthly fee … but, not for you – as a reader of this blog, I feel morally obligated (seriously!) to keep my promise that I would NEVER ask you to pay a dime for my online services.

This won’t stop me from advertising the hell out of this re-launched site elsewhere, looking for paying customers … but, NOT HERE.

[AJC: This is about as good an offer as you will ever receive in this life, so maybe you should take advantage of it]

Foundation Membership (this is exclusive for the first 70 QUALIFYING $7million7years readers) is just like the Premium Mmbership that others will need to pay for – but, you get it for LIFE and for FREE.

Joining will enable you to find:

EXACTLY how much money YOU need in order to be rich [hint: this will be different for everybody]

WHEN you need to stop working full-time and WHAT you will be doing with your new-found freedom

WHAT steps you need to take in order to amass the fortune that you need

HOW to find your passion and turn that into cash

Most importantly, you will find THE ONE THING – more than any other – that helped me move from $30k in debt to $7 million in the bank in just 7 years … and, how it is virtually guaranteed to work for you.

This is no scam or Get Rich Quick system that tells you how to invest in real-estate, stocks, online businesses, or any other method that made the author rich [or, was it just selling you the information that made the author rich?!] …

… no, this is a NEW and UNIQUE Guided Learning Experience that will show you how to get as rich as you need to be, doing whatever it is that you are most passionate about.

Haven’t found your passion?

Don’t worry, that’s one of the first things that we will cover 😉

If you want to become one of the 70 Millionaires … In Training! click here now, before 70 others jump in ahead of you!

Still reading?

There’s nothing more to know!

Just click the button … I’m offering you – just 70 of you – the Keys To Willy Wonka’s Chocolate Factory, perhaps you shouldn’t look a gift horse in the mouth? 🙂

Good Luck!

Adrian.

The Ultimate Gift – Part I

Posted on March 29, 2010 by Adrian

There are lots of reasons to read this blog but, in this special two part post, I am going to give you the ultimate gift …

… I’m going to add 20 years to your life!

After all, what good is life after work (a.k.a. retirement) if you die soon after?

[AJC: we can thank TraineeInvestor for this link – the inspiration for these posts; yet another reason to keep a close eye on the comments to my posts 😉 ]

Aiming for $1 million?

Posted on March 28, 2010 by Adrian

$1 million? Pleeezze … even Dr Evil knows you need (a LOT) more than that these days 😛

AJC’s Secret Strategy?

Posted on March 19, 2010 by Adrian

Every financial ‘expert’ has a secret strategy …

… you know, the one that made them $1,000,000 simply by doing [insert: strategy of choice]; just try googling “how I made million” and you’ll come up with listings like:

How I Made $77 Million In Two Years & You Can Too by Vincent James

How This Kid Made $60 Million In 18 Months

How I made a million in 3 months.

How I made over $2 million with this blog

How I made my first million: Schoolboy entrepreneur…

7million7years- How to make 7 million in 7 years …

How I made a million dollars investing in real-estate

One link is about making millions in real-estate; another through marketing your business; another through online businesses; another through promoting yourself via your blog, and so on …

In fact, you’ll find one guy talking about how to make $7 million in 7 years through commercial real-estate and business 😉

At least that is the vibe that I am picking up, if Ryan at Planting Dollars (who kindly mentioned my blog in this post about personal finance outliers) is representative of my readers:

There are two blogs in the personal finance arena that are obviously outliers.

Adrian at 7 Million 7 Years… How many people do you know that are worth 7 million? Adrian did it in 7 years and writes about his strategies that are, of course, not common sense and not mainstream. He advocates starting businesses and investing in commercial real estate.

Jacob at Early Retirement Extreme… He retired in 5 years via traditional work, lots of traditional work, and cutting his living expenses to the bare minimum.

I may have used real-estate (both commercial and residential) – fueled by very modest (at the time) business-generated cashflow – to make my first $7 million, and then actually selling the businesses to make my next … but, I also used stocks, negotiating, options, gold, and relationships to make a few more million, as well.

Starting a business and/or investing in commercial real-estate may be the exact wrong – or right – strategy for you to make your $7 million in 7 years, too.

It all depends …

First, though, if there’s any ‘secret’ to making millions, it’s to truly understand the game of financial roshambo:

Stocks have no intrinsic advantage over Real-Estate; Real-Estate has no intrinsic advantage over Business; Business has no instrinsic advantage over Stocks.

This applies equally to how you choose to earn your money, as well as how you choose to invest it.

In fact …

It’s the combination of what you earn (income) and what you do with it (invest) that provides the compounding that you need in order to reach your Number.

For example, if you put a little extra salt-and-pepper into your income-producing strategy, you may be able to back-off the gas a little with your investing strategy (as long as you have cultivated excellent MM101 habits, so that you don’t just piss it all away).

On the other hand, if you are subsisting on a meagre office-job salary, you may need to ramp up your income with a little side business and you may need to seriously ramp up your investment strategy with some RE and/or stocks.

Three examples:

– I pursued a high risk / high reward business strategy to generate the cash that I then invested in real-estate and stocks to allow me to reach my Number; to ensure my success, I chose to push the risk throttle by expanding my businesses internationally.

– Josh has chosen an even higher risk / higher reward income-producing strategy by trading ‘penny’ pharma stocks with ever larger portions of his Networth going into one or two ‘trading positions’; I advised him to put a portion of his ‘winnings’ into lower risk / lower reward investments such as buy/hold RE, Value stocks, Index Funds, or (dare I say it), Bonds or CD’s to ensure that he reaches his Number.

– Mike has chosen a high-income-employment path to producing the income required to fuel his investment strategy, but has chosen to ‘invest’ his Net Worth mainly in cash. I advised him to maintain his current earning capability, but ‘up’ his investment risk profile up the scale to, say, Index Funds so that he can then pretty much cruise to his Number.

It’s different for everybody …

In neither Josh’s nor Mike’s case does commercial real-estate or business need to figure greatly in their journey towards their Number.

And, it may not figure in yours 🙂

A hidden risk of reward …

Posted on March 15, 2010 by Adrian

I have postulated before on the $5m5y Phenomenon: why is it that 80% of lottery winners, winning absolutely life-changing amounts such as $5 million (all the way up to $150 million) lose 100% of their winnings within 5 years?

Think about it, it’s a staggering amount of money: how would you even go about spending $1m+ a year for 5 years, starting from an almost zero spending base?

Jake hits the nail on the head for at least one of those reasons:

When you hit your number or are well on your way toward it, how do you deal with family that are not making progress to their number (or likely ever will get there).

Specifically, how do you keep a cordial relationship – i.e avoiding acting like a heartless a-hole but also avoiding being the family patsy / sucker who pays for everything.

If you are making good progress toward your number, you are likely very hard working, talented and lucky. Chances are that family members lagging behind are lacking one or more of those traits, often the one associated with hard work.

Yes, after the houses, boats, vacations, girl/boy friends, and Ferraris come the financial-vacuum-cleaning carpet snakes:

Your friends and relatives 😉

Having had [AJC: too much] personal experience dealing with exactly this type of issue, let me try and give you some random pointers, which you will need as your journey progresses:

Stage 1 – When you are still on your journey towards your Number

– Lie about your financial circumstances; the corollary is to keep your spending under control, which has the side benefit of actually helping you to reach your Number

– Complain about everything: business is bad, your investments aren’t doing as well as you hoped, and so on

– Take a preemptive step: actually try and borrow money from those most likely to put the hard word on you [AJC: don’t try too hard though, you don’t actually want to owe your relatives anything]

Stage 2 – Just as you reach Number

– OK, it might be difficult to hide behind a veil of poverty (unless you are some sort of miser); so, you will need to rely on the old “can’t confirm/deny anything” … this is best done by attitude rather than words: in other words, when one of your friends says “Frank’s really loaded now”, just smile wryly or – if you have to say something – try “don’t believe everything you hear”

– You could still try and borrow money from your relatives to “help pay some back taxes that I owe … nothing serious”; this works best if you also put a For Sale sign on your Ferrari.

– At least try and keep your post-windfall spending spree in check; and, it’s likely – if you’ve been following the advice on this blog – that your Lifestyle isn’t going to to take a big jump, rather you will not have to work to maintain it.

Stage 3 – Making Money 301

You have your Number, but you forgot to build into your chosen lifestyle a certain amount for ‘paying off the friends and relatives’ [AJC: if you’re still calculating your Number, now’s your chance to put something in there], what to do?

– You will have no choice but to do certain ‘good deeds of kindness’; for example, we paid for two tickets for family members to fly to the US to see us. We flew them coach, provided no spending money, looked after them generously while they were with us (we paid for all meals, etc.), but they were grateful.

– Keep these ‘acts of generosity’ few and far between, or they will be soon seen as ‘rights’ and you will end up wearing all the cost with none of the benefit.

– Simply accept it as a ‘cost of doing [family] business’ that you will be the one footing the bill at all family events; we find ‘prior engagements’ for as many of those family functions as possible: out of sight, out of our pocket.

– Give 30% to 50% (only for family … friends get no more from you than anybody else) more generously for gifts than others; it will be expected and there’s not much you can do.

– Ditto for tips; if they know who you are, you had better be a little more generous if you want to avoid your food being spat in.

– Listen politely but offer little when friends and relatives come asking you for ‘advice’ … they are really sounding you out to ask you for money (they will call it a ‘loan’, but you know it for what it really is); your only protection is preemptive (see above).

– You are far better off to be seen doing ‘good works’ and giving to charity; the aim is to be seen as a good role model and something that your good-for-nothing-freeloading-ex-friends-and-still-relatives can aspire to when they make their own money.

Just remember, unless you built a huge Charity Case Buffer into the calculation of your Number, you have no choice but to let your friends/relatives do the right thing and work on their own Numbers … unless, you no longer want to be able to live your own Life Purpose?! 😉

You are already wealthy!

Posted on March 14, 2010 by Adrian

This guy actually talks a lot of sense … the subtext being that – in historical and/or Third World Country terms – we are already wealthy …

… so, don’t make your life about making money, make ‘making money’ about supporting your Life.

No more, no less 😉