Books 007: Millionaire Booklet - Grant Cardone

One of the first books I read by Grant Cardone, was the Millionaire Booklet - a short guide on how to become super rich. In this book, Grant attempts to simplify the process of becoming a Millionaire and super rich. He is a 100% certain that there are actionable steps that an individual can take to make this happen, regardless of the current economic condition, where we live, or what we do. 

Below is a summary of Grant's story and tips for becoming a Millionaire:

Ever since he was young, Grant made a commitment to creating wealth for himself and family for generations. Although he made this commitment at sixteen, he was broke at the age of twenty-five. In order to pursue his goal of becoming a Millionaire, he began to study the principles of wealth creation and applied what worked for him and did not. Through trial and error, he increased his savings to $10,000 and then to $100,000. He became a Millionaire in his early thirties and built over five companies that produce over $100 million in sales in each year.

Where do you get your financial advice?

Grant first debunks the myth that becoming a Millionaire is not a pie in the sky dream, and that the wealthy come from all walks of life, and that the reason most people never get rich is that they never even consider it a possibility. As these people are convinced by those close to them to simply be satisfied with whatever their financial situation is.

In addition, people fundamentally do not know how to get money, fewer understand how to keep it, and almost no one knows how to multiply it. He goes on to say that, even in one of the richest countries in the world, America, 76 percent of people live paycheck to paycheck, some 50 percent of Americans have no money for retirement, and 47 percent of Americans don’t have $400 for an emergency. He disagrees with the thought of saving your way to wealth like “don’t drink Starbucks coffee, and you will save $700 a year.” Per Grant, “you can save $700 a year for the next fifty years and you won’t be rich, you’ll just be old.”

The issue that many people face is where we get our financial advice. Most of the advice we get about money is from people close to us who either don’t have money or have given up on it. Some of the people we get advice from have never even thought financial freedom possible. Grant tells us to look beyond the noise and confusion about money and look at people who have created enormous amounts of wealth. These are the people we need to study and model our financial journey

Be on offense

Getting rich is mostly a game of offense, not defense like other people may have taught. You get wealthy by creating income producing assets and increasing cash flow not by cutting coupons and saving. Taking risks today is the way to eliminate risk, but you have to take risks at the right time. The middle-class is for those who settle for just enough rather than striving for prosperity. The middle-class life is a compromise. Grant goes onto say that when we compromise our finances, we become unable to help others, as we are struggling to simply take care of ourselves.

In his book, Grant shares that the first step to becoming a millionaire is to make a decision and that requires us to lose our middle-class mind and then get our millionaire mindset. It has never been easier to get rich, but it is still impossible if we don’t change our mind. For example, most people will produce or be in contact with a million dollars in their lifetime. Meaning, if we earn $50,000 a year for twenty years, we earn one million dollars. The purpose of doing this math is to simplify the objective. “Do the math to create possibility, then create strategy.”

Below are a few ways to a million dollars:

Salary $50k x 20 years

Salary $100k x 10 years

Salary $250k x 4 years

5,000 people buy a $200 product

10,000 people buy a $100 product

1,000 people buy a $1000 product

Stay Broke

When you start increasing your income, Grant tells us to stay broke. He has a policy to never, ever have money sitting around. Once he starts increasing income, he immediately moves the surpluses to sacred accounts that are out of his reach and marked for future investments. The real benefit of this strategy was it forced him to continue to produce and out-work his earlier results. There were months when he was making more money than he has ever made and he would push the entire surplus into his sacred accounts. When he did this, Grant couldn’t pay his rent even though he was making more money than he's ever made. He was forced to negotiate with his landlord for an extension on his rent. 

This state of staying broke forced him to continue producing new revenue. As Grant saw first hand so many people have financial success, then quit doing what created their success and then go backward financially. Staying broke forced him to keep reinforcing the actions that had already proven successful. Grant's formula for success is as follows: Idea + Hard Work x Time + Discipline = Success

Save to Invest, Don’t Save to Save

Investing money is how you will get super rich. He shares how he believes the only reason to save money is to one day invest money. Most people aren’t equipped to take advantage of opportunities because they don’t have the money, they don’t have the knowledge or the courage. People don’t create wealth because they never invest enough in a deal to get a big payoff. To do this, one must have a surplus of cash and confidence. When you know it’s the right thing, he advises that we go all in, as speed is power. 

We must have complete confidence in the investment and in our previous income flows so that, if the investment takes longer to work or even fails, we still can rely on our earlier flows of income. Grant is willing to go broke and exhaust all his cash knowing he is not putting his family or those who depend on him at risk because the earlier income flows can support him. 

The poor and middle class try to replace flows of money while the rich try to supplement (add) more flows. Grant explains that creating multiple flows of income is the holy grail of creating financial freedom and true wealth. The most common mistake he sees people make when creating multiple flows of income is walking away from the current flow. The next most common mistake is moving to secondary flows that are not similar to the first and then being unable to give both proper attention.

When creating your second flow of income, Grant advises us to monitor our current flow and never abandon the first flow. For instance, if you work at a company and earn a salary, keep improving on what you do for that company and look for ways to create a second flow parallel to what you are currently doing. Do it within the company you work for during the time you are at work. To create multiple streams of income requires commitment and especially discipline in how you use your time and money.

Repeat, Reinforce and Hyperfocus

Maintain a commitment to self-improvement even though it may mean that you need to change your environment (e.g. friends and family). This doesn’t mean we need to get rid of people, but it means you need to add new people. The old friends will just fall off as they will lose interest. If you want to make it into the club of wealth, you must add new connections and that means you need to reach up, not sideways and not down. Remember that you are the average of the five people you spend the most time with.

To add new people to your circle, make a list of people in your network that are super successful, on the move, who are interested in personal growth, active in charities, who invest time to improve the quality of their lives, and are not just complaining all the time. These are the people you should surround yourself with.

Favorite Quote: “Money seems to flow to those who give it the most attention and take the most responsibility for it.”

Good Luck!

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Books 006: Retire Early with Real Estate - Chad Carson

When Chad Carson, the author of Retire Early with Real Estate came out with his new book, I knew I had to get a copy. I had been following his blog for a while and felt like his advice was practical and actionable. His book breaks down into five main parts which include thoughtful philosophies as well as practical strategies for retiring through rental properties. He uses a metaphor of climbing a mountain throughout the book and the importance of preparing your mind, understanding the route, preparing for the climb, taking small steps, and dominating the climb itself.

As there are tons of real estate books, podcasts, and courses out there, for the experienced investor, part 1-3 may sound redundant, however, I encourage you to renew your understanding of the basics and pick up a few golden nuggets in Chad’s book. Below is my review of his book and key takeaways:
 

Part 1 - Why Real Estate Investing

Chad explains how determining your WHY for investing in real estate is crucial before you even start preparing for this journey. As you may have read from my previous blog posts, I believe that 80% of success in anything starts with the right mindset, and when you are so sure of your WHY and have the will to succeed, you will be able to break down any barriers, roadblocks, and overcome plateaus. Otherwise, you may find yourself out of gas and giving excuses at the first sign of struggle (e.g. I don’t have money/time, I don’t know how to find deals, I don’t know if real estate works, etc.)

The first chapter in this books introduces the acronym IDEAL, which stands for - Income, Depreciation, Equity, Appreciation, Leverage, and why these 5 reasons (and many more) provide massive value for the real estate investor who is trying to create cash flow and financial freedom/early retirement.

Part 2 - Map of the Financial Mountain

In Part 2 of this book, Chad encourages the reader to set goals to understand what you’re climbing toward. Questions such as “how much wealth does one need during retirement”, “what is your retirement destination”, and “not waiting on happiness to come to you”. Chad also does a great job sharing the profiles of actual real life investors who have experienced the very topic discussed in this book to illustrate actionable steps that people took to reach their goals (similar concept to Millionaire Real Estate Investor and Millionaire Next Door). One unique trait about this part is that it challenges to people to stop and think about the climb to financial freedom before they start. A lot of people read Rich Dad Poor Dad, or attend a 3-day bootcamp on real estate investing and dive right in. Although I applaud these individuals for taking action and not forming analysis paralysis, but like the quote says, “if you don’t know where you are going, any direction will take you there”. Remember that you are the captain of your ship to retirement and you will need to be clear on the path, what retirement will look like to you, and draw out the map.

Part 3 - Preparations for the Climb

In Part 3, Chad discusses the basics of wealth building, which are the same whether you invest in real estate or anything else. He discusses how average people become “rich” such as increasing income, and reducing your expenses, for start. Further he discussed the five different wealth stages that he observed with many other investors:

  1. Survival

  2. Stability

  3. Saver

  4. Growth

  5. Withdrawal

As with any type of investing, it is important to have a solid foundation for which you build upon your portfolio. Before you start your climb you want to make sure you are in optimal physical shape. By increasing your wages and reducing your expenses, you are in much better shape to take advantage of opportunities that arise, have flexibility in taking risks, and not be riddled with obstacles before you even begin (e.g. bad credit, loan denials due to debt-to-income ratio, no money for downpayment). At the end of the day, it is a simple formula, by spending less than you earn, you will have positive cash flow. Repeat this over time, and concurrently increase your income and decrease your expenses, and the snowball effect will be exponentially great.

Part 4 - First Steps

Now that you have found your WHY, drew your financial roadmap, and prepared for your climb, it's time to take your first steps. In Part 4, Chad shares useful strategies to build wealth and reach early retirement using real estate. Chad covers different wealth building strategies such as house hacking, live-in flip, and the BRRRR strategy (buy, rehab, rent, refinance, repeat). Although these strategies will fit each reader differently according to their current marital, financial, and personal situation, you can use one or a combination of these strategies to build true wealth.

Part 5-7 - The Climb

Now that you have tools such as house hacking, live-in flip, and the BRRRR strategy in your tool belt, Chad explains tips for getting to the top of the mountain when you want to live off your income for the rest of your life. This part includes my favorite chapter of the entire book - chapter 15: The Rental Debt Snowball Plan. I personally like this chapter as it seems like a hybrid idea of popular real estate investors and Dave Ramsey (aka No Debt). Although I love the idea of using leverage (other people’s time, money, and knowledge) to build wealth, there is something called being “over leveraged.” Once you get to a certain portfolio size, I believe it is prudent to reduce risk by deleveraging your portfolio through the rental debt snowball plan. This plan explains how we can tackle the smallest (or highest interest) debt with the excess positive cash flow to reduce leverage and build a portfolio of debt-free investments that reduce impact of different market cycles for a long term buy-and-hold investor.

Another key point made in this part is the trade up plan or 1031 exchange. Section 1031 of the IRS tax code allows investors to defer the gains made on the sale of their real estate assets through a “like kind exchange” (Please consult your CPA for details on how this may impact your finances). By trading up from one rental to another you are able to lock in the gain and purchase bigger, better real estate without allowing taxes to destroy your wealth. At the end, when you kick the bucket, your heirs will be able to receive the portfolio at market value and not have to pay additional taxes on all those years of depreciation and deferred tax gains.

The last part of this book shares the importance of having backup plans to your retirement, as well as finding a retirement withdrawal plan that will last as long as you need it as well as build security around your portfolio.

Favorite Book Quote: “Real Estate is the vehicle, taking control of your money and your life is the destination.”

In conclusion, whether you are a novice, or experienced real estate investor there are themes and actionable items that provide value. As we head into 2019, I highly encourage you to read this book and reflect on your goals and build upon your current strategies for an early retirement.

Good Luck!

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Books 005: Max Out your life - Ed Mylett

Max out your life by Ed Mylett is a short, no-nonsense, step-by-step strategy book aimed to help you #MAXOUT Your Life and become an elite performer. Ed is one of America’s top 50 wealthiest under the age of 50, and is acknowledged for building one of the largest financial organizations in America today. Ed has been sought after, and privately mentored many of the top professional athletes, entertainers and business executives in the world for over two decades helping them to perform at #MAXOUT levels of their lives.

Think about this, the average person lives for about 78 years. Of those years, 28 is spent sleeping, 15 years working and commuting, 7 years spent worrying about life, many years on mundane activities, eating, getting dressed, surfing the internet, etc. , which leaves you with approximately 8 years to life your life. If you were told you had 8 years to life your life, how would that change your perspective, would that ignite urgency in your day to day habits and allow you to take more action and less time thinking?

Ed shares this example to depict how each of us do not really know exactly how much time will be given to us. You often hear of people who are older speak of regrets, and the opportunities missed, and chances not taken. Whether this be a dream audition, interviewing for a new job position, or asking out someone on a date. You hear less from people who gave it their all trying out something that eventually may have not worked out, as they will have no regrets, and will have learned from their actions.

In his book, Ed shares his strategies for the following:

1. Creating Strong Habits and Rituals

Ed shares how we as humans, are what we do, and not who we say we are. Habits and rituals allow us to stay motivated when the going gets tough. When we are weak, tired, and under pressure, our mind and body goes into habit mode. That is why it is so important to create habits that serve us and keep us on track even when we aren’t “feeling it”. Some of Ed’s daily morning rituals include waking up before sun rise, taking a cold shower (waking up the body), quick breathing and stretching exercises, meditation, review of goals, eating well, and working out. Ed reminds us that the two most important questions you must ask yourself are 1) why are you doing the things that you do and 2) how you will reach your goals

2. What is the RAS & How to Program

The average person has 75,000 thoughts everyday and 91% are exactly the same as the day before. This is why it isn't hard to see why people plateau and are in the same situation that they were in regards to their relationships, career, finances, fitness, etc. Do you have stop to think about your thoughts? Your thoughts are like magnets and they attract/filter the world you see. There is a bundle of our nerves at our brainstem called the Reticular Activating System (RAS) and it acts as the gatekeeper, filtering out irrelevant information and allowing only relevant information to enter our awareness. Your RAS takes what you focus on and creates a filter for it. Then it takes all the data that is received through your brain and unconsciously filters only pertinent information to you. Have you ever thought about making a purchase (e.g. car, clothing, electronics), and afterwards, you keep seeing those items again and again? They have been there all along, but your RAS is now creating a filter allowing it to enter your awareness. By understanding this and using it in a positive way, you will be able to take control of your life by controlling your thoughts and believing that the outcomes you desire will happen.

3. Raising and Shifting Your Identity

Ed explains how our self-confidence, or what we believe we are worth, equals our identity. Our identity is how we see ourselves, and we can never succeed beyond our identity. So the most powerful force in the human spirit is to live in connection with the ideas and beliefs that we hold true. Identity is like a thermostat with a pre-set temperature. As you are the one who controls the temperature, this is an internal game, not external and how you react to those change to temperatures. As you are in control, regardless of the external elements that may temporarily drop the temperature, you will find a way to bring it back up. You may have heard the term, you are the average of the 5 people around you. As such, the people you associate yourself with may influence what temperature you decide to set your thermostat. Know that you can’t skip the work and be ready to roll up your sleeves and get your clothes dirty as you strive towards success.

4. Goal Setting Strategies

Ed shares how we should set goals as if we already have possession. Be very specific with your goals and remember the three main ingredients: specificity, accountability, and visualization. Being specific is important as saying “I want to be rich” is vague and not a real goal. By identifying the amount of wealth you want, when you will achieve it, and what it will look like, creates an actual target you can it. The clearer it is, the more likely that your mind, body, and soul, will go to work on creating those things in your life. The second part is accountability. There is a reason why people share their goals with people who hold you accountable. When you become distracted by happenings in your life, having another person outside of those distractions can help connect you back to those goals. Lastly, visualization of your goals is wildly important. By focusing on these goals repeatedly in your mind, your brain will become more familiar with it to help identify the paths, people, and tasks needed to achieve them. Your “why” is seventy times more powerful than your “how”.

5. Developing Your Will to Win

As you strive towards your goals, you want to ask yourself if you can be bought. Most people allow their will to win to have a set price. With enough rejection, pain, and setbacks, people will relent and sell their way to win. Most people are not willing to put in the extra work to better themselves. They fall into the pattern of working for a job they don’t like for just enough money to pay for a handful of bills and a modest lifestyle (A salary is nothing but a bribe a business owner has paid someone to work on his/her dream instead of their own). If you have truly committed to your dreams, there is no obstacle or price to high. Your will to win is not for sale. As you progress and achieve milestones, do not allow that progress to cloud the vision to your ultimate goal. Small wins create the illusion that you are successful and you may take the foot of the gas pedal. Eventually, you may start telling yourself, “this is good enough” and compromise. You settle for less than your goals and dreams. This is why your identity is important and making sure you don't re-set the thermostat to settle for short term success and accolades.

Favorite Book Quote: “The average person has 75,000 thoughts every day, and 91% are exactly the same as the day before. It isn't hard to see why so many people stay in the exact spot in life as it relates to relationships, careers, finance, fitness, etc. Do you ever think about what you think about? Thoughts are like magnets; they draw to you that which you think about regularly. They also create the filters you see the world through. If you want real change, you must first change what you are thinking about.”

Become the ultimate and best version of you. The YOU that you were BORN TO BE.

Good Luck!

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