About five years ago I was quite skeptical about e-readers and e-books in general. I thought they lacked “the feeling” of a real book. There was no smell, no cover that you could touch with your fingers and no weight that you could feel in the depth of your backpack…
Then I bought my first Kindle and everything changed. I didn’t get a single paper book for years since that purchase. One click of a mouse and the book would instantly transfer from Amazon to my Kindle library. A truly magical experience!
Last year was different. I started buying paper books once again. For some reason, it makes me feel great seeing these different covers on the shelf of my real library, instead of a compact digital soulless representation on my e-reader…
I wonder if any of you guys had the same “paper to e-book to paper” transition, or was it just me?
Anyway, there is one book in particular that I wanted to mention today. It’s called The Millionaire Next Door and I got it on eBay for a few bucks because of someone else’s recommendation.
Honestly, I was a bit doubtful when I first picked it up and didn’t feel like reading another personal development/mindset book with a cheesy title that would give you “the shortcuts and secrets” of making a lot of money.
Then I looked at the overwhelmingly positive reviews on FakeSpot.com and decided to give it a shot. If you are not familiar with FakeSpot it is an awesome free service that I use almost every time I make purchases on Amazon. It’s extremely simple – you just enter product URL in the search box and get a score back.
On the backend, it has a massive database of reviews and some proprietary algorithms to separate out fakes from real ones. Cool idea, but for some strange? reason Amazon wasn’t really interested in doing it themselves.
You would be surprised to learn how many fake reviews there are… In the process of going through different online marketing courses and tutorials, I discovered an entire multi-million niche that was focusing solely on selling products on Amazon.
There is a lot of special SEO tricks and tactics designed to game the system and move specific products higher on the Amazon’s results page. As you probably guessed already, a good product review is an extremely important factor.
Here is another mind-boggling fact – about 50% of shoppers go straight to Amazon search, before visiting other search engines like Google! No wonder why so many people go above and beyond in order to try to game the system and get a piece of that hot customer’s traffic.
Think about it next time you see a bestselling product with thousands of 5-star reviews. While it may seem like a no-brainer, it takes just a second to double check it with services like fakespot or reviewmeta, especially if you plan to buy something expensive. I personally saw listings with over 90% fake reviews. Crazy stuff.
Ok, back to The Millionaire Next Door book.
From the very first pages, I realized that it will be an interesting read. The authors conducted a very comprehensive study of millionaires and summarized common traits that helped those people to build and maintain their fortunes within a single generation.
Here are some of the takeaways that stood out to me personally.
Too many people, myself included, focus on money generating activity (offense). Why bother counting money and “penny-pinching” when you can focus on making more, right?
Well, not so fast. While it’s true that having a top-notch offensive game is great, but it’s not what makes people wealthy.
There are many examples where high earning individuals making over 700K a year accumulate very small wealth. They just increase/reduce their spending in accordance with the current income levels.
As soon as they get more money, they buy bigger houses in upscale neighborhoods, fancy cars, expensive watches, clothing, send kids to private schools and become members of the different country clubs with hefty annuals fees.
Throw in a wife with very similar spending habits and a few kids who absorb and mimic their parents’ behavior. No wonder why most of the income suddenly evaporates…
At the same time, there are people who manage to build significant wealth nests with meager households incomes of just 80K.
Yes, they know how to count money, but financial freedom is their number one priority.
They rarely stress about losing a day job because they have enough to last years without a paycheck, plus they know how to live on a short supply.
They have family budgets and focus on investing instead of trying to show off in front of other people.
All nice and cool, but in order to start investing you need savings and some financial knowledge. Yet the whole American dream including mass media making a huge emphasis on spending and acquiring.
Here is the deal, in order to maintain a lavish lifestyle you have to realize more income and of course, pay more taxes.
Government loves people who flash their money (movie stars, singers, actors, athletes and other celebrities) because it can easily bite a big chunk of their huge income. At the same time, it hates wealth builders because they always focus on minimizing taxable income and tend to pass on their wealth so that it creates a minimum tax liability.
We rarely see or hear stories about frugal families where people work hard, live a simple life and prioritize wealth building over-consumption.
But how about “we live once” or “live like there is no tomorrow” mentality?
Well, to tell you the truth, none of the wealthy people said that they are unhappy with their current lifestyles. Quite contrary, they have much fewer worries about tomorrow, compared to other people, including high-income producers.
Money for them is just a byproduct of what they do, not the end-goal.
Wealthy people have the rare luxury to focus on something that they really like to do, instead of what they must do in order to survive. It’s a huge benefit.
Ok ok, you can have your big house and a fancy new car if you feel like it, but only after you accumulated some serious wealth (1 million dollars to start with).
Do we have a deal? 🙂
When I came to united states about 12 years ago I had almost zero knowledge about investing or wealth building concepts. None of those questions were discussed in my family and as the result, I wasted a lot of time and money focusing solely on offense completely ignoring the defense.
I thought credit was a bad thing (apparently there is a big diff between good credit and bad credit).
I didn’t make contributions to 401K and other pre-tax accounts, thinking that I would rather have more cash at hands (which is taxed at ~30%).
I didn’t have a small business to deduct my expenses.
I didn’t know the difference between Active / Passive income and proper legal structures around those.
I had zero ideas about assets protection, advanced insurance strategies, lines of credit, business credit or mortgage acceleration.
I didn’t know that you could self-direct your 401k and access the money penalty-free before you retire.
I wanted to refinance my house the next year after the purchase, forgetting about re-finance costs. So glad that I didn’t.
The only criteria I considered when I needed an accountant (and other professionals for that matter) was the fee that I had to pay…
Those are just some of the examples from my own life.
Now I look at things a bit differently and focus on my own financial freedom in addition to generating more $$.
The path is there and it’s quite simple, yet so few people dare to explore it.
Earn, save and invest.
What could be more simple, right? But just like everything else, it takes discipline and understanding of your financial situation and goals to start moving in the right direction.
Don’t put it off, the sooner you start the better off you will be.
Before I go, I’d like to recommend another book that covers both savings and investments part of the equation. It’s called “The Business Owner’s Guide to Financial Freedom: What Wall Street Isn’t Telling You”.
Make sure to get that one and absorb the ideas. Really useful practical stuff.
Mark Kohler, the author, is one of the guys I really look up to. I attended his training in NY and he is super fun, awesome and smart (considering rather boring financial niche). Highly recommend his “Refresh your wealth” podcast as well.
Ok, time to wrap it up.
I’m sure many you are looking for financial freedom and dream of living a life on your own terms.
Pick up those two books that I mentioned in the post and take action!
P.s. Feel free to share your own resources related to the investing in the comments section below so others could benefit as well.