real rich, real simple, redux

This is a redux of a 2009 post, but it’s about time that I gave my newer readers a heads-up as to what we’re all about … if I had to point somebody to just one of my posts to get them started this would be the one; putting in all of the links nearly killed me 🙂


I get a lot of questions, comments, and e-mails in general from new readers, and this one – from Chad – is reasonably typical of what I might see:

I’m turning 27; just got a job making 50k/yr.; on the market for my 1st condo to live in (and hopefully rent out a room); have 1 student loan at < 3% fixed interest. My goal is $7 million in 13 years.

1. I have very little to no knowledge of finance/investing. Do you recommend any resources to get me up to speed so I can understand what you write about?

2. Where does my situation put me in terms of Making Money 101 and 201, i.e. where do I go from here?

I appreciate ANY direction you can give me as I do not want to be stuck behind a computer in a cube for the next 30-40 years.

While I love reading these sorts of e-mails (AJC: I really do!], I have a hard time responding because I can’t / don’t give direct personal advice … but,

I can suggest that Chad think about:

1. Exactly HOW important that $7 million in 13 years is to him, and

2. Assuming it’s VERY important (critical even), how he is going to get there.

You see, my advice might change according to his Number – more importantly to his Required Annual Compound Growth Rate:

a) If low – say, no more than 10% to 15% – then I would point Chad to the various ‘frugal’ blogs (my personal favorite is Get Rich Slowly) and ‘starter books’ like The Richest Man In Babylon, or the more modern equivalent: Automatic Millionaire by David Bach, or anything by Dave Ramsey or Suze Orman.

Each would probably suggest something along the lines of:

– Keep your job; times are tough!

– Save as much of your salary as you can (max your 401k’s, then your IRA’s)

– Pay down ALL debt, following a Debt Avalanche or Debt Snowball, whichever is your favorite

– Invest any ‘spare change’ (after all debts are paid off and the requisite ’emergency fund’ has been built up) into a low cost Index Fund

… and, wait until your government-directed – or, employer-forced if you are retrenched and become unhireable – ‘retirement’. This is where that fully paid off home and a lot of candles and canned food stockpiled will really pay off … you won’t be able to afford real food 😉

a) If high – say, more than 10% to 15% (and, I would venture that $7 million in just 13 years would well and truly put Chad in the 50+% required annual compound growth rate category!) – then I would instead point Chad to books like Rich Dad, Poor Dad and The E-Myth Revisited and then towards this blog and its 7 Millionaires … In Training! ‘sister blog’ and suggest that he starts working his way through the back issues (well, posts).

After reading/digesting properly, he should be able to come up with his own plan … something along the lines of:

– Keep your job, but get into active stock and/or real-estate investing – better yet, start a side-business; because times are really tough(!):

i) A mildly successful part-time business might provide additional income to help you weather the financial storm and supercharge your savings, investment, and debt repayment plans

ii) A more successful part-time business might provide a built-in ’emergency fund’, tiding you over should you lose your job and/or unexpected expenses crop up

iii) An even more successful part-time business that can be started and/or survive during a recession may prove to become wildly successful once the clouds of the recession begin to lift, maybe even carrying you directly to your Number [AJC: do not pass Go, but do collect $200 million 🙂 ]

Control your spending, and save as much of your salary as you can to build a war chest for starting / running your business

– Pay down ALL expensive debt, following the method laid out in the Cash Cascade, but keep your mortgage (lock in to current low rates) subject to the 20% Rule and the 25% Income Rule and seriously think about keeping your other cheap debt loans.

– Invest any ‘spare change’ from your job and business (after all expensive debts are paid off and the requisite ‘business startup fund’ has been built up) into quality ‘recession-priced’ stocks and/or true cashflow positive real-estate.

… and, wait until you have reached your Number (through sale of business and/or conservative valuation of your equity in your investment assets).

That’s it 🙂

The Pay Yourself Twice Wealth Strategy!

As you have no doubt worked out for yourself paying yourself twice is in itself just a stepping stone to financial success.

Let’s just quickly recap for new readers:

The likes of David Bach (The Automatic Millionaire) like to tell you that you needn’t do much more than ‘pay yourself first’ (i.e. save) 10% – 12.5% of your gross salary in order to live an idyllic life (well, at least retire well) … going so far as to call this “A Powerful One-Step Plan to Live and Finish Rich”.

The reality is that this is actually a dangerous financial strategy to pin your financial future on.

Whilst the idea of saving money is to be commended – in fact, saving is absolutely necessary – the sad reality is that you would need to pay yourself first 75% of your gross income, starting now and continuing for the next 20 years, just to maintain your current standard of living in retirement.

Clearly, my solution – which is to Pay Yourself Twice 15% of your gross salary – does little to bridge the gap.

Of course, it’s what you do with the money that counts:

I assume that your current ‘pay yourself first’ savings are going into some sort of employer sponsored, tax-advanatged retirement plan …

… which we already know cannot possibly be enough to support your current lifestyle in retirement, let alone set you up for that hammock in the Bahamas with free flowing Pina Coladas that you crave 😉

However, I do want you to keep your retirement fund going – and growing – because it is insurance, if all else fails.

But, it’s the “all else’s” that will make the difference between an austere retirement in 20 – 40 years or a certainly more memorable (and, very early) retirement with $7 million in 7 years … or a happy medium, if that’s more your speed.

And, that’s why you need to Pay Yourself Twice:

– Once to maintain this insurance policy, and

– The second time to build your investing war-chest.

If the power of compounding at bank to mutual fund rates of return (i.e. 4% – 10%) is not sufficient, then it stands to reason that you need to start investing at (much) higher compound returns.

This means building up a modest starting capital amount and ‘rolling the dice’ with higher risk / higher reward investments e.g.

A few minutes with a good compound growth rate calculator will (a) confirm how well your current strategy is doing against your desired retirement needs, and (b) tell you how deep into the above table you need to dive to bridge the gap.

It goes without saying – so, I’ll say it anyway (!) – that I hope that you all succeed with your investments, be they in stocks, real-estate and/or businesses. However, if you should fail … well, by continuing to Pay Yourself Twice, it won’t take too long to build up enough starting capital to have another go.

And, it might take one, two, five times before you are successful …

All the while, you have a 20 year backup plan (by also continuing to pay yourself first) just in case 😉

The fallacy of multitasking?

Kevin exposes a fallacy:

Concentration…fortunes are built on it—or lost by the lack of it…

Here’s a clue…if you’re a salesman, you have to sell; if you’re a writer, you have to write; if you’re an accountant, you have to be crunching numbers. The more time and energy spent doing something other than your primary activity, the less progress you’ll make in your career and the less income you’ll earn.


I used to struggle with this myself …

My natural tendency is to do a LOT of things … at once.

My father (my then business partner) used to tell me to forget the ‘new business’ and just focus on his one.

My wife used to tell me to focus.

Then I did an online ‘psych test’ about ‘money and personality’ (I highly recommend this one: you’ll want to do the A-Index AND the Financial MO+) …

I learned two things about myself that changed my mind … then, my life:

The A-Index told me that I was an entrepreneur – this may be “well, duh” to you, given the title of this blog, but – at the time – it was news to me: I was a struggling entrepreneur, but wasn’t feeling very well cut out for the ‘job’.

The Financial MO+ Index told me that I work best by having “several balls in the air at once” – it’s the way my mind works best, the report said, and it was 100% true.

So, these reports – all $150 worth – gave me the confidence to work according to my instincts … and, a 356% compounded return on my investment 😉

Kevin’s ‘fallacy’ may well be true for 99% of people. But, it’s not true for me.

And – just maybe – if you want to achieve results that only 1% of the population ever dare aspire to and achieve, it won’t be true for you, either?

In any event … I learned to follow my instincts and so should you!

The meaning of success …

If you’re a new reader, you’ll pretty quickly find out that I only write when I think that I have something useful to say …

So, the best thing to do is scan this post and if it’s interesting, subscribe by e-mail / RSS and I’ll pop a quick e-mail into your in-box if the urge to write does strike.

Today, I am inspired by a post written by moneycrush about success:

“Big goals take time, which means it can be especially hard to stick to them when they require both time and sacrifice.”

Here, moneycrush equates success with “reaching your goals”. giving an example of getting your house paid off.

So, this got me thinking about the nature of success:

On the surface, I am successful.

Certainly my friends and family talk to me – and, of me – in those terms.

Now, they don’t necessarily know my net worth (after all, that’s why I write here under a nom de plume), but they do know that I sold three businesses in three countries … so, they can connect the dots.

They don’t realize that, by their measure of success = money, I was already ‘successful’ well before  before I sold my businesses, and well before those businesses even made any serious money.

Because I was quietly doing what I advise my readers to do: take your income and use it to buy income-producing assets instead of spending it. What my family and friends don’t realize is that’s how I made I made $7 million in 7 years, starting with $30k in debt.

In any event, I still don’t consider myself successful.

That doesn’t mean that I’m one of those guys who chases ever bigger and bigger financial wins …

It just means that I measure success differently:

To me, success is when I am living my Life’s Purpose. And, money is just one of the enablers.

In 1998, I discovered my Life’s Purpose; it was simply to “always be traveling mentally, physically, and spiritually”.

Now, that means nothing to you … so, let me translate that into some practical incarnations of that Purpose:

– Travel … a lot. This takes time and money.

And, comfortably. For me, this means about $50k a year of business class travel. I’m about to experiment with a roll-up mattress on the business class ‘lie flat’ seats; if that doesn’t work, I’ll need to ‘upgrade’ to first class because lack of sleep on the long-haul flights from/to Australia kills me.

– Personal Finance & Public speaking … twin passions of mine. I hope to be able to combine these, one day. The money I might earn is irrelevant.

I rarely get to indulge in public speaking these days; the hidden cost of no longer being attached to the corporate world. But, I discovered this passion about 30 years ago, yet have spoken publicly less and less as time has gone on. This blog, as well as being a passion in its own right, is one step towards resurrecting myself as a public speaker. My book (out soon!) is the second.

– Venture Capital … this goes with the ‘traveling mentally’ bit.

I must admit I was worried. Stories about VC’s investing in 10 businesses in order to (hope) that one may succeed scared me, with typical (VC-like) bricks and mortar investments requiring upwards of $250k each. Fortunately, the internet came along and I’m happily working on my little angel investing fund, which allocates $25k+ per investment. If 10 fail, well, it shouldn’t hurt much more than my pride. Fortunately, success rates are closer to 30%, so I’m told (hope!). In either case, but don’t tell my partners this, I’m only in it for the stimulation and … fun!

– the touchy/feely spiritual stuff. I’m not exactly the next great guru, but this doesn’t cost any money – or much time – and feels … well … nice.

So, for me success is more about what I do than what I have.

But, I am just starting to live my Life’s Purpose: I’m beginning to travel more; but, I am just starting my venture capital activities and my book isn’t out yet (hence, the speaking offers haven’t exactly flooded in) … so, I am working on my ‘success’ but am clearly not there, yet.

Now, I suggest that you find out what REALLY matters to you and go about becoming ‘successful’ too 🙂

The ‘No New Year’s Resolution’ Resolution!

I’ve just returned from my longest vacation-from-blogging that I’ve had in the the 3 years since I’ve been writing this blog.

Some of it had to do with poor internet access where I was traveling; it was supposed to be a ‘first world country’ but had ‘third world’ internet access. But, that was also probably a side effect of the second reason that I didn’t post: I was too damn tired/busy from touring.

I made the ‘mistake’ of agreeing to take a two week educational/discovery tour with a busload of other families from my childrens’ school: whilst educational, it was hardly a vacation! On the bus / off the bus … next historical site … on the bus / off the bus … three to four times each day. Crawl into bed each night exhausted, on the bus again by 8am the next day.

And, being a group tour, the hotels were set at the lowest common denominator: around 3 stars, hence the poor internet access.

Now, this probably sounds like fun to my main readership base (sub-30’s singles or young couples / no kids) … the rest of you are nodding in silent agreement: there comes a point where Hilton-hopping is REALLY what you need in a vacation!

Anyhow, we’re back and enjoying Resort Cartwood (i.e. home) with it’s huge landscaped and tiled 5-star surroundings, pool, tennis court, home theater, and so on … who needs a holiday away from home!

We celebrated New Year whilst away … which really means that we did nothing but had a wonderful view of the fireworks from our hotel window.

But, it did get me thinking:

Why make resolutions on New Year?

Does that mean that you wait – on average – 6 months to finally build up the courage to ‘resolve’ to do something that you already know is important for you to start doing / quit doing?

Does that mean that you put off for an average of 6 months that which you ALREADY know you must change?

Does that mean that New Year Resolutions are yet another means of justifying procrastination?

Does that mean that you build up the change to such a crescendo that by the time New Year comes and you – for some reason – fail to succeed in making the change, you’ll be too ashamed to try again (at least until 10-12 months later when the next New Year comes around and you build up the courage to ‘try’ again)?

So, why not have a New Day’s Resolution?

If you have something that you need to change, don’t wait until a New Year to resolve to change it, wait until the next day?

Well, I even have an issue with that!

You see, why delay – even a tiny bit – by RESOLVING to do anything?

Why not just DO? Now!

And, don’t even fool yourself into ‘trying’; do as Yoda says:

Try Not. Do or Do not. There is no try.

That’s why I’ve just resolved to never again make another New Year Resolution … at least, not until next year 😉

All you need to know from a guy who does know …

After three years, you may be sick of listening to me – besides, by now, you should be $2 million or $3 million into your own $7 million 7 year journey, so what can I teach you? – so, here is some really important advice from Darwin Deason, a self-made billionaire entrepreneur:

Forbes Magazine: You have $100,000–where do you put it?

Darwin Deason: It depends on age and goals–but if I was young, I’d put all of it in a company that a) I could directly influence or control, and b) that I loved.


If you have your own financial advice, or feel that summarizing somebody else’s ‘personal finance system’ into “just one page” would be fun – and useful – then I have 5 x $100 Apple Gift cards to give away!

Just check out this post to join the action:

But, hurry … the giveaway finishes on Thursday November 11th (the last day for submissions) and the entries are already starting to come in!

Winners announced Monday, November 15.

Just one page …

Yesterday, I mentioned that Trent Hamm, from a Simple Dollar is giving away a book called Everything You Ever Really Needed to Know About Personal Finance On Just One Page. You can get the eBook – for free – by clicking on that link.

But, what I really like is the first page; which you can download by clicking here => OnePage.

[click on image to enlarge]

It shows a neat summary of Trent’s thoughts on personal finance in a one page ‘system’. Sure the diagrams are hand-drawn, but everything is clear, succinct, and easy to understand.

But, I don’t agree with everything that Trent says … and, I think that there are other personal finance systems around. It’s just that nobody else has bothered to put them on one page … yet.

That’s why I announced yesterday’s giveaway!

I want to encourage others to put their thoughts on personal finance – whether those thoughts are original, or just neat encapsulations of what has been written elsewhere – into a similar ‘one page system’.

I don’t have any fixed ideas on this, but I imagine that simple diagrams and arrows with a few bullet-points sprinkled in here or there will do the trick … but, I won’t know until I see it.

Now, I have five $100 Apple Gift cards to give away to the 5 people who I think have done the best job, but only if I like what they have done. Call me sole judge, jury, and executioner 😉

But, I really do want to give all five gift cards away … that’s $500 folks … so, hit me with your best shot/s (yes, you can submit as many entries as you like)!

Remember: I’m looking for simplicity & content over appearance. Trent’s page is ‘elegant’ in its simplicity, clarity, and completeness … that’s what I want from you.

Here is a link to the giveaway page, where there are more instructions: $500 Apple Gift Card Giveaway!

Thursday November 11th is the last day for submissions, and I’ll be announcing the winners on Monday, November 15.

You can e-mail your submissions to me at ajc [at] 7million7years [dot] com – or, simply plonk a link to them in the comments of yesterday’s post (or, this one) if you’d rather publish on your own site …

… and, if you already have a blog, why not let your own readers have a one page summary of your personal finance thoughts, and win their undying gratitude … and, maybe get a $100 Apple Gift Card for your troubles? 😉

Good Luck!


Put your system onto just one page and win a $100 Apple Gift Card!

Trent at a Simple Dollar did something really neat: he put Everything You Ever Really Needed to Know About Personal Finance On Just One Page.

It’s such a great idea, that I want to do the same thing!

But, I’m lazy 🙁

So, here’s the deal: put everything that YOU know about personal finance on one page, and you could win a $100 Apple Gift Card.

In fact, I have FIVE of them to give away. But, it’s at my discretion as to who – if anybody – wins these (but, I really do want to give all 5 away).

The ideas could be yours, mine, (not Trent’s because he’s already published his), or anybody else’s (but, link to the source): the presentation (simplicity + completeness + usefulness … not “how pretty it looks”) is what’s important here!

All up, this is $500 of my own hard-earned money … that you get to spend on really cool apple gear … so, make this good!

You can post a link in the comments (if you really can’t link to anything, send it to me as an e-mail and/or attachment to ajc [at] 7million7years [dot] com).

Shall we say 14 days?

More details tomorrow!!!

Why Vegemite is like personal finance …

It occurs to me that, at the age of 49+, that I still like Vegemite, that quintessential Australian curiosity very loosely labeled as ‘food’.

If you don’t know what Vegemite is, let me give you a few brief ‘highlights’:

– Vegemite is a salty black spread that is best used VERY sparingly on toast or dry crackers;

– Aussie children are almost weaned on it … it’s the only way to learn how to like it!

– It’s predecessor is Marmite, an English product derived from animal fats;

– Vegemite, on the other hand, is made from the sludge left over from pouring beer out of its vats (really!)

– It used to be fed to pigs, because of its very high Vitamin B content, until an Australian Food Scientist discovered how to refine it slightly and feed it to children [kids = pigs?]

Even though I actually LIKE Vegemite, I can understand that to most people it is totally inedible:

I met a food scientist who was working on a project to create Vegemite cookies to help feed the less-fortunate in Africa (again, because of its super-high Vitamin B content); this came on the back of the very successful Milk Cookie project which helped to bring Calcium to places (like Africa) where the shipping and transport of dairy products would be just too difficult.

Unfortunately, they had to cancel the project … there was just no way to make the Vegemite cookies taste good!

Now, I can actually relate to how bad this stuff must taste to others (yet tastes so good to me … in moderation!) because I was traveling to Amsterdam and in the clothing store (that I stopped by to buy a hat and scarf for the bitterly cold winter weather) there was a jar of candy on the counter …

… actually, it was liquorish – so, I took one and almost spat it straight out … it was THAT horribly salty! Apparently, it’s a delicacy in Holland on par with Vegemite (and, as bad tasting to the uninitiated).

One man’s food it definitely another man’s poison.

But, to get an idea as to how popular Vegemite really is – despite the taste (!) – here are three anecdotes for you:

1. Kraft bought the rights to Vegemite at some point, and if you visit their offices in Northbrook, Illinois (as I have) you will see its logo displayed very prominently on the wall above the receptionist’s desk. Not bad for a product only sold in a country of 20 million people (and, stocked in the USA almost purely for visiting Aussies).

2. Vegemite is inherently kosher (apparently pig food isn’t as unkosher as pigs-as-food) , but when Kraft decided to cut costs and take it off the kosher list (meaning that religious Jews in Australia could no longer buy it … a very small minority, in a very sparsely populated country), there was such an outcry that Kraft had to certify Vegemite as kosher again.

3. When we came to America, we brought 6 huge jars with us (and, brought more back on every trip home); this is not just us: my wife accidentally met a girl who was also relocating to Chicago … they were both at the supermarket checkout with a few of these large jars and (naturally) got talking.

So, what?

Well, there is a personal finance message and it’s this: one size doesn’t necessarily fit all … what one person likes may not suit the other at all.

That’s why when Steve asked me why I recommend that you put aside 2 year’s living expenses in retirement (as opposed to zero dollars before retirement) in your ’emergency fund’, I can’t really disagree when he says:

Adrian, what you said makes sense in most cases I suppose, but ,each case /person will have different circumstances ,even after retirement.Some sort of funds set aside seems a wise move.You cannot fore see very situation that might arise,especially at an advanced age.

So, yes I agree that there is no magic in the 2 years’ number: put aside 1 year, 18 months, 2 years, or more …. I don’t really care!

And, does it really matter whether you meet the 20% Rule or make it, say, 15% or 25%?

Probably not …

BUT, the principles behind these rules – indeed, the whole methodology that I am slowly unfolding in these posts (in the random, shambly way that bloggers like to follow) – is One Size Fits All.


Because the principle is simple: Find out how much you need to make (and why and by when), then work out how hard you need to work (financially) and how much risk you need to take to get there, then go for it!

But, if you stray too far from the the guidelines that I provide, the chances are that you will not be investing enough to make any sort of meaningfully large Number by any reasonably soon Date.

Second guess the Been-There-Done-That Multi-Millionaire who has a passion for sharing his hard-won personal/financial experience at your peril 😉

Monetizing your passion …

If you want a business but don’t know where to start, think about monetizing your passion.

By that I mean, find out what it is that you like to do in this world (golf? personal finance? knitting?) and parlay that into a business.

Here’s somebody who turned a passion (and talent) for jewellery made from twisting little silver-plated wires into a $600k+ p.a. online business that teaches others how to do the same!

That’s why I recommend that you start today …

… whether you have any idea what/how to start your business or not, start by writing a blog.

It can tell others how to do whatever it is that you do (if you are already an expert), chronicle your own journey to ‘expertness’ (great way to get started, even if you don’t know much about your passion at all), or it can simply be a collection / review of others who are experts.

Down the track, you’ll have enough randomized blog entries to create some of your own information products … all neatly reviewed, scrubbed, and honed with the volunteer assistance of your readership.

What do you think I’ve been doing with this blog all of this time? 😉

Seriously, if you think this is hard, check out this story of a 9 y.o. who decided to (successfully, I believe) help pay for his own heart operation by writing/selling an e-book:

Inspirational, true story even without the business/money lesson that I had to wrap around it!