David Finkel's Wealth Blog: October 2006

Tuesday, October 31, 2006

Wealth Tip 27: Build Maui Giving into Your Business and Investing from the Very Start

When you add in the component of giving, suddenly doors open that normally wouldn’t be open. Remember when we talked about the synergy of dreams that occurs when you combine your dreams with someone else’s? The same thing happens when you combine giving in with your business plans.

The way you get your dreams, or your deal, is that you are now helping someone else get their dreams. It’s a way to overcome barriers. The differences in status simply go away.

Now suddenly, whether homeless or a king, a person who makes wise business decisions or poor life choices, all will benefit when a business combines the efficiencies of a successful business with heart.

Maui Giving might just be the critical edge that can take your business to the next level. Take the example of Maui Millionaire™ Morgan Smith, founder of Morgan Financial, Inc., a nationwide mortgage brokerage company. When Morgan first came as a star to Maui he had a successful business originating over $500 million of loans each year. But Maui inspired him to make giving a big part of his company, and he involved his staff into it. It’s become a powerful differentiator that ties employees to be committed to his company. The results? They raised tens of thousands of dollars for worthy causes, involved his team in meaningful ways and his company’s net worth has tripled in the last three years. This year his company is on track to originate approximately $2 billion in loans!

For more on how to tap into Maui Giving to help the world, see, The Maui Millionaires, pp. 211-233.

Monday, October 30, 2006

Wealth Tip 26: Use Maui Giving to Affirm Your Abundance Thinking

It’s one thing to drop a dollar or two in the collection plate at church every Sunday. It’s a completely different thing to set a goal of paying for all school fees for every orphan at the 227 orphanages in Juarez, Mexico (they are currently helping over 80 orphans now) or to reduce the rate of recidivism for prisoners by teaching them powerful life-coping skills. Those are the type of projects that make you gasp just a little bit. And, when you do that, you expand what you know you can do. Those are both projects taken on by Maui Masterminders as part of the Maui Mastermind™ event.

Beverly Sallee, one of the Maui Mastermind™ Stars, tells the story that changed her view of giving. It happened at her church one Sunday. The pastor brought a cute little boy up front with him. He showed the boy two cookies and then proceeded to eat one. He raved about how good the cookie tasted and how it just melted in his mouth. The poor boy could hardly contain himself waiting for the pastor to hand him his own cookie. Imagine how he felt when the pastor instead said, “You know, I might need this one later. I think I should just keep it.”

That’s the same thing that we do when we hang on to something (just in case),
when others need the same resource. We might withhold money from needy causes or time from our family – hoarding it “in case” we need it later.

Remember, Maui Giving is the greatest affirmation of your abundance and prosperity that you can make. It’s you making a powerful declaration that you have more than enough—more than enough time, more than enough talent, and more than enough money.

For more on how to tap into Maui Giving to help the world, see, The Maui Millionaires, pp. 211-233.

Sunday, October 29, 2006

Wealth Tip 25: Remember that in a Very Real Way, Real Wealth is what You Give

There will come a day in all of our lives, sooner than we think, when we will transition out of this world. No matter what your beliefs are about what happens next, one thing it’s important to think about is what the legacy you are leaving behind is.

Whose lives will you have touched? What causes did you passionately fight for? What fires of goodness did you light and tender through the dark hours?

Maui Millionaires™ have all made the deep commitment to leave the world a better place for them having lived. Join us in this commitment because when it all comes down to the end, real wealth isn’t the dollars in your bank account, it’s what you’ve given to the world.

For more on how to tap into Maui Giving to help the world, see, The Maui Millionaires, pp. 211-233.

Saturday, October 28, 2006

Wealth Tip 24: Re-evaluate the Meanings you gave to the Pivotal Money Experiences of Your Childhood

I’ve already talked about your Wealth Operating System™ in earlier Wealth Tips. I’d like to share a highly personal story of how I’ve come to re-evaluate one of my early money moments.

For me one of the most painful memories of money that I had was of a time when I was a pre-teen. My parents were just in the starting phase of a painful divorce that was quite messy and emotionally painful. I was sitting in the kitchen when my mom came up to me and asked me if I knew whether or not my dad had sent the alimony and child support check yet that month because it was late. She was clearly very distraught and I remember how so uncomfortable I felt at that moment, like I wanted to disappear. The “lesson” I learned was that money was something you shouldn’t talk about. It wasn’t a safe topic. It was dangerous.

As you can imagine, this lesson influenced my life in many ways. I avoided the topic of money wherever I could, and pushed away from money. To me it was bad and dangerous. I know too many people this might seem crazy to make one experience mean this much, but remember, I was a twelve year old kid who didn’t have the capacity at that moment to see that my mom was really in pain and needing to garner me as an emotional ally. I am not making any judgment over that moment, only that as a young kid I made it mean something that had long term impact on my life.

It took some real soul searching to realize that I made that moment mean something that disempowered me. In truth, I brought the limiting meaning to the experience by the story I made up about the experience. We’ve all done the same thing in this and other areas of our lives.

Maui Millionaires™ consciously craft the meanings and stories of their lives to empower themselves. You have that same opportunity in your own life.

For more on your Wealth Operating System™ including a 5 step system for upgrading it see, The Maui Millionaires pp. 19-78.

Friday, October 27, 2006

Wealth Tip 23: Meet weekly or bi-weekly with Your Mastermind Team and Work Together to help each of You Become more Successful

A Simple Format to Run Your Mastermind Meetings

Here is the simplest format that you can use to run your mastermind meetings. First, I recommend that you meet regularly, at least once a month. You can meet in person or over the phone.

Next, divide up the time you have into equal parts so that each member gets a fair share of the time devoted to helping them accomplish their goals. For example, if you have a total of four mastermind members and you are meeting for one hour each week, give each person 15 minutes.


What to Do With the Time

1. Give a 2-3 minute recap of the activities and results for the week. This should be in bullet points that were put down in writing BEFORE the meeting.

2. Share the three things that went best about the week.

3. Share one specific thing that you will do different next week that will have the greatest positive impact on your investing.

4. For the final 5-10 minutes, get feedback from the group. This feedback can be in the form of questions or direct input.

One Final Way to Use the Time

Use your mastermind group as a source of accountability for your actions. Have each member make concrete commitments for action steps they will take. Check in first thing the following week to see if they were done. I urge you to consider removing any mastermind member who consistently fails to meet their commitments. You cannot afford the luxury of catching their character.

I hope that all of this has given you some tangible ideas to use to try out creating a mastermind group of your own.

It’s made such a huge impact in my life. Early on the biggest benefit I got from my mastermind group was the faith to go after my dreams in business. Later my mastermind group helped give me the candid feedback I needed to fine-tune my action plans.

For more strategies and techniques to get the most out of your mastermind team, including a powerful technique to use your mastermind team to generate breakthrough wealth ideas see, The Maui Millionaires, pp.125-164.

Thursday, October 26, 2006

Wealth Tip 22: Follow the Five Laws for Forming your Mastermind Group

The Five Laws for Forming Your Mastermind

1. BE SELECTIVE -- Character is contagious. Be careful whose character you catch!

2. EACH MEMBER BENEFITS -- No one will give their full-hearted cooperation over time without getting some tangible benefit in return. Make sure you work to benefit each member of your mastermind group on a consistent basis.

3. MAINTAIN HARMONY -- This is a tall order. A mastermind group with tension or conflict is degraded to a simple committee. The single most important rule to maintaining harmony in the group is that while you can question ideas and input, never question INTENT. If you do, you will destroy the relationship.

4. COMPELLING AND DEFINITE CHIEF AIM -- Collectively create a compelling outcome for the group towards which all of you are fully in agreement on. This direction will focus your collective power and allow you to harness it to awesome effect.

5. MAINTAIN CONFIDENTIALITY -- People will be much more open and cooperative if they feel they can let their guard down and authentically and safely share.

Tomorrow I’ll share with you a simple format to actually run your mastermind meetings.

For more strategies and techniques to get the most out of your mastermind team, including a powerful technique to use your mastermind team to generate breakthrough wealth ideas see, The Maui Millionaires, pp.125-164.

Wednesday, October 25, 2006

Wealth Tip 21: Form a Mastermind Group and tap into the 10 Biggest Benefits that Successful Masterminding can Bring You

A mastermind group is a group of two or more people who come together to work towards the achievement of a definite chief aim, in the spirit of harmony, with the commitment that every member derives a tangible benefit from the group.

It’s a concept first shared by Napoleon Hill in his classic self-help book, Think and Grow Rich.

Maui Millionaires™ have learned how to tap into the power of their mastermind groups to get the following ten benefits:
1. Accountability
2. Contacts
3. Expertise
4. Fresh perspective
5. Support and encouragement
6. New ideas
7. Expanded resources
8. Place to share your successes
9. A community of success-minded peers
10. Fun and camaraderie

In tomorrow’s Wealth Tip I’ll share with you the five laws for forming your own mastermind group to help you build your wealth faster and easier.

For more strategies and techniques to get the most out of your mastermind team, including a powerful technique to use your mastermind team to generate breakthrough wealth ideas see, The Maui Millionaires, pp.125-164.

Tuesday, October 24, 2006

Wealth Tip 20: The Fastest Path to Creating Wealth is by doing what you Love—tap into Your Passions to Create Your Wealth

So much has been written about finding a “good paying job.” Well we think this is lousy financial advice. As you have already learned in earlier wealth Tips, earned income is one of the worst predictors of financial success. But more than that, to truly excel financially it pays to do something that you love and are passionate about.

Think of it this way: if you are driving a car on a two lane highway and you are looking to get off at the next exit, what lane will you be driving in? The right hand lane, also known as the “slow lane”. Well, when you don’t love what you are doing for a living there is always a part of you that is looking for the exit. Which means you are in the slow lane? By doing what you love you immediately move yourself over to the left hand lane and push down on the accelerator.

I’ve interviewed a lot of Maui Millionaires™ and one thing that almost all of them have in common is that they love what they do. Granted, many of them started off in careers that they hated, but for all of them, when they let go of what they didn’t love to create the time to focus their energy on what they did love, their wealth building took a huge step forward.

Monday, October 23, 2006

Wealth Tip 19: You are Already Incredibly Wealthy

With all this talk about money and wealth it’s important that you don’t lose sight of one unquestionable fact: you are already amazingly wealthy.

Look at all the blessings you have in your life. You have your family and friends; you have your health (even if it isn’t perfect); you have freedom; you have the native intelligence and attributes you were born with and have cultivated over your life time. And you have so much more.

It’s our belief that one of the most powerful ways to remind yourself about how wealthy you are is contained in one word: gratitude.

What are you grateful for in your life? Or what could you be grateful for in your life if you allowed yourself? Who are the people you love? Who has made a difference in your life? What experiences will you treasure forever?

Don’t let Madison Avenue convince you to wait to feel wealthy only after you’ve bought the fanciest car or biggest house. Begin today to cultivate the attitude of gratitude in your daily life.

For more on tapping into the power of gratitude and recognizing how wealthy you already are see, The Maui Millionaires pp. 3-4, pp.237-241.

Sunday, October 22, 2006

Wealth Tip 18: Negotiation is a Skill that must be Practiced to be Mastered

While you can learn a tremendous amount about negotiation through reading and listening, ultimately to put this knowledge into action in the real world will require regular practice. Here are three places for you to practice your developing negotiation skills with little risk.

1. At local garage sales or flea markets – both as a buyer and as a seller
2. At your local shopping mall (negotiate a discount or other extras the next time you buy clothing, jewelry, or luggage)
3. When you travel (negotiate for a free upgrade at the hotel or rental car lot, or perhaps for a lower price on a city tour, or other perk)

Over time you will find that you start to incorporate your new skills when you are at work, with your family, and in your local community. In the long run this will make your wealth building faster, easier, and more enjoyable.

Saturday, October 21, 2006

Wealth Tip 17: Negotiation is a Skill that can be Learned from Reading and Listening

Like any skill, negotiation can be learned—by anyone. Here are several great resources that helped me in the beginning stages learn to master the skill of negotiation. One important note here: negotiation is a language. And like any language it is essential that you don’t just read about it, but that you listen and speak it. That is why two of the recommendations I make below are for the audio version. (I’ll go more into my suggestions for practicing your negotiating skills in the real world in the next wealth tip.)

Negotiate This, Herb Cohen (Audio)
How to Win Friends and Influence People, Dale Carnegie (Book)
The Secrets of Power Negotiation, Roger Dawson (Audio)
Influence: The Psychology of Persuasion, Robert Cialdini (Book)
The Psychology of Persuasion, Hogan (Book)

(Side Note: If you are interested in a more comprehensive home-study system to learn this crucial skill, make sure you go to www.MauiMillionaires.com and see the comprehensive negotiating course available in our online catalog. In my admittedly biased opinion it is the best course available. It will be available November 30th, 2006.)

Friday, October 20, 2006

Wealth Tip 16: Master the Skill of Negotiation—it is one of the Most Important Wealth Skills you can Cultivate

Whether it be on the job as you are negotiating a contract with a vendor, or working through the specific pricing on a consulting contract you are offering to your number one client. Or even with a contractor who is giving you a bid to repair your house. The skill of negotiation is one of the highest paid skills around, and you will be paid handsomely for learning it well.

For example, my wife and I recently built a second home for ourselves. During the course of the construction our general contractor bought over $40,000 of building materials from a local vendor. I spent about 30 minutes total negotiating with that vendor over a month to give us a 5% rebate on all our purchases in his store in exchange for us giving him such a volume of business. This time saved us $2,000. Or take the case of a business deal I negotiated whereby a seller of a business I wanted to purchase sold me his interest in this multi-million dollar business for less than $100,000.

The skill of negotiation is what helps you buy a $500,000 house for $420,000. Or save $10,000 on the wedding you are throwing for your daughter.

In the business world the skill of negotiation has made me millions of dollars, and it can do the same for you. Imagine you are selling a business that you have built and are down to the final negotiations on price or terms. Or that you are hiring a new employee and are negotiating the compensation package. Or perhaps you are considering funding part of a real estate deal in exchange for a significant equity stake. In business and investing you negotiate at hundreds of times each year, with any one of those negotiations meaning a great deal of money, security, and freedom for yourself. This is why this skill is so critical for Maui Millionaires™.

So how do you learn this critical skill? That is the subject of our next two wealth tips…

Thursday, October 19, 2006

Wealth Tip 15: To Become Financially Free you need Passive, Residual Income. Active Business Cash Flow or Passive Income is NOT Enough

I became a millionaire at age 32, but I wasn’t financially free until a few years later. It’s not enough to make a million dollars or more per year of income. You are not financially free until you have the passive, residual cash flow and net worth to support your lifestyle for the rest of your life.

Looking back, one of the biggest financial mistakes I made was thinking that the seven figure business income I had created would last forever. Because when I sold my business, while I did get a nice fat wire transfer, but the cash flow from the business went to the new owner. It was at that point I realized that I needed residual income streams that were independent of my having to work to truly be financially free. That changed my investing focus (which up until that point hadn’t been on investing for cash flow but rather on investing for maximum equity growth).

I want you to learn from my mistake. When you begin to accumulate a significant net worth as a Level Two wealth builder, make sure you shift a real portion of your financial energy to generate passive, residual income as a Level Three wealth builder.

For more on the three types of cash flow and creating passive income see, The Maui Millionaires pp. 167-190.

Wednesday, October 18, 2006

Wealth Tip 14: Take the Frugalatarian™ Route

There is one more track to become financially free; we call it the Frugalatarian™ route to financial freedom. Basically this is the path taken by people who save and conservatively invest 20-30% (or more) of their income over their 20-40 year working career, while at the same time minimize there living expenses to be very low.

While this isn’t the path that Diane and I have chosen to become financially free (neither of us wanted to wait 20+ years to become financially free, nor do we like living so frugally), it is a viable path to become financially independent.

If you don’t like the idea of building a business, and if becoming an investing expert who can tap into forced appreciation deals isn’t for you, then this third pathway may just be the right one for you. By the way, this path is the one that is most accepted in our culture. Haven’t you heard the saying, “work really hard, live on less than you earn, invest the difference in smart investments, and you’ll be able to retire financially independent and secure”?

Because both Diane and I have used and believe in the other two financial tracks, building businesses and investing, we won’t have too much to say about the Frugalatarian™ track, although a careful reader will be able to apply a number of the Wealth Tips to this financial plan.

Tuesday, October 17, 2006

Wealth Tip 13: Becoming an Investor

An investor is someone who finds assets that they can buy or control with the anticipation that those assets will either increase in value or generate a passive cash flow, or ideally BOTH! For me I started off building a business and as an investor at the same time. My focus as an investor started off buying single family homes and condos. After several years and hundreds of properties I made the move to larger commercial real estate deals (apartment complexes, shopping centers, office complexes, and industrial buildings.)

The key for an investor is to become an expert in a niche, and then focus on investing in that niche where you have cultivated an advantage. As a Level Two wealth builder you are investing for “Forced Appreciation” rather than passive cash flow. Forced appreciation comes when you buy an asset and through one means or another you “force” that asset to become more valuable. For example, you buy a 12-unit apartment building that is not well managed. You work to clean it up, rent it out, and increase the rents while lowering the expenses. By doing this you have tapped into forced appreciation to make the building worth tens or hundreds of thousands of dollars more.

I once bought a 322-unit apartment complex for about $7.5 million. The building had a 45% vacancy factor! We fixed it up, filled it to 80% full, and then sold that building for about $2 million more than we had bought it 18 months before. That $2 million increase in value over 18 months is another example of forced appreciation. It didn’t happen because the whole real estate market moved up; it happened because we created value in the deal to make that forced appreciation happen.

Monday, October 16, 2006

Wealth Tip 12: Build a Business

The fastest way to build your net worth is to start and build a successful business. This is the path that I first took myself. I started with less than $6,500 and an idea and with a partner built a multi-million dollar business in about 5 years. Three years after that I sold my half of the business and had my first “retirement” at age 36 (I got bored and four months later came out of retirement to build several more multimillion dollar businesses, although this time making sure to build them the right way, as Level Three businesses, which will be the subject of a later Wealth Tip!)

The best thing about businesses is that they can be started from scratch, with very little capital, and be expanded fast to generate a TON of cash flow. And any business that generates a lot of net profit also has a market value based on that cash flow. Thus not only are you building a lot of active cash flow that you can spin off into other investments (see below), but you’ve also built an asset itself (the business) that has a great deal of value in the market.

Sunday, October 15, 2006

Wealth Tip 11: Real Wealth isn’t Money in Your Bank Account but rather the Intangibles you Enjoy in Your Life.

So many people who struggle financially (and far too many people who are financially affluent) mistakenly see money as an end of itself. It isn’t. In reality money is simply a sufficiency need that once satisfied ceases being important. As you work to build your wealth never loose sight that your real wealth is in the quality relationships you build, in the health you are blessed to enjoy, the deeper meaning you are able to tap into, and the legacy of sharing and giving you are able to leave behind.

Money matters, but only to a point. It is a form of energy that opens doors and gives you options, but by itself it cannot create meaning nor can it guarantee wealth. So focus some of your energy on building financial freedom, but never lose site of its place in the bigger picture of your wealth building.

Saturday, October 14, 2006

Wealth Tip 10: Focus a Portion of Your Wealth Building Efforts on Creating Passive, RESIDUAL Income.

Residual cash flow is money that flows to you again and again. This could be the monthly cash flow you enjoy from a commercial building you own that is managed by a professional management company. This could be quarterly distributions you earn from a passive interest you own in a business partnership. This could be dividends you enjoy from publicly traded securities. The key distinction is that residual cash flow is an income stream that flows to you over and over again.

In my personal wealth building this has meant monthly cash flow from commercial real estate, interest payments I receive from first and second mortgages I own, and the cash flow I enjoy from Level Three businesses I own which require less than 10 hours per month of my personal time to run.

Where are you putting a portion of your wealth building energy into in order to create passive, residual income? The answers you come up with will ultimately have a larger impact on your becoming financially free than any amount of active “earned income” you’ll likely to generate.

For more on the three types of cash flow and creating passive income see, The Maui Millionaires pp. 167-190.

Friday, October 13, 2006

Wealth Tip 9: Create Passive Cash Flow—Money that Flows to You without You Having to Work for It

Passive cash flow is money that comes to you without you having to actively work to generate it. In fact, I’ll put a more rigorous definition to this—passive cash flow is money you earn while working less than 10 hours per MONTH to create it.

Examples of passive cash flow are the money you earn from a CD or money market account. Or the lump sum payday you earn when you sell a property you have owned for a number of years that was being managed by an outside property management company. Or the money you earn when you sell an asset that you have owned that took minimal oversite from you personally to manage.

Still, by itself, passive cash flow isn’t enough because it often isn’t ongoing. For example, over the past ten years I’ve owned interests in well over a hundred houses. These properties were totally managed by outside joint venture partners who did the almost all of the work. Over time I sold off my interest in this portfolio of houses for a lot of money. This income was passive because it required so little of my time to create it. However, once sold, I now no longer generate any more income from those houses. I made a lot of money, but lump sums of money are not enough for financial freedom. Instead you need to invest a portion of your wealth for residual cash flow. This is the subject of the next wealth tip.

For more on the three types of cash flow and creating passive income see, The Maui Millionaires pp. 167-190.

Thursday, October 12, 2006

Wealth Tip 8: Earned Income is Sugar

There are three types of cash flow: active cash flow (aka: “earned income”), passive cash flow, and residual cash flow. Most people in our culture focus on increasing their active cash flow, either by finding the highest paying job they can, or by actively working to grow their business. While the goal of increasing your active income is laudable, rarely will it by itself lead to financial freedom. In fact, earned income is one of the worst predictors of financial freedom.

Why is that? Because with additional earnings most people in our culture step up to a more expensive lifestyle. In fact, they don’t just spend the additional active cash flow on one time purchases, but rather they often buy things that bring with them a much higher fixed cost of living. This includes things like a more expensive home or a fancier car, both of which bring with them many years of higher monthly payments.

Earned income is sugar. It is empty calories that may sustain you for a moment, but soon burns through. What is the way out of this trap? To focus on creating on the other two forms of cash flow—passive cash flow and residual cash flow.

For more on the three types of cash flow and creating passive income see, The Maui Millionaires, pp. 167-190.

Wednesday, October 11, 2006

Wealth Tip 7: Level Three Wealth Building – Converting Net Worth Into Passive, Residual Cash Flow

As you build your net worth there will reach a point in time when you need to transition a healthy portion of your focus away from investing or business building for massive equity growth to instead creating passive, residual cash flow. Rarely will you find a business or investment vehicle that gives you forced appreciation, great cash flow, and takes very little of your time. Usually as a Level Two wealth builder you focus on investments and businesses that give you the first two—forced appreciation and cash flow—but take time and effort on your part.

But once you have the financial strength that a large net worth gives you, it’s time to focus some or all (depending on your real goals) to convert that net worth into passive residual cash flow. This could be done by turning an active business into a true Level Three business. A Level Three business is one which has the team, systems, and outsourced solutions that are capable of having that business thrive without you the owner actively participating in that business.

Or your could make the shift to creating passive, residual income by changing your investment focus to capitalize on the many great cash flow creating investment choices. For me I’ve made this shift in my own personal wealth building by passively investing in commercial real estate. I also am building my two current businesses so that over the next 36 months I can turn them into a true Level Three business. What will I do then? Probably take a few months off and build another business. I can’t help it, I love building businesses that make a positive difference in the world and I don’t think I’d like to “retire” in the traditional sense.

The key to your later stage wealth building is to make this transition and not to rely on the cash flow from active businesses as the source of your financial freedom. This is the topic of the next Wealth Tip.

For more on Level Three wealth building see, The Maui Millionaires pp.186-189.

Friday, October 06, 2006

Wealth Tip 6: Level Two Wealth Building—Aggressively Growing Your Net Worth

Hi everyone,

Since I'll be tied up over the weekend I decided to go ahead and put up the wealth tips through next Monday.

Remember, the book comes out on Nov 4th (possibly earlier.)

Enjoy the tips.

David

Wealth Tip 6: Level Two Wealth Building—Aggressively Growing Your Net Worth

Now that you have a foundation of financial skills and knowledge under your belt, it’s time to begin building your wealth in earnest. In a moment I’ll share with you the three main wealth building tracks, but first I want to be very clear on one thing—you will NEVER feel totally ready to step from Level One to Level Two. There will always be a good deal of fear as you make this jump. Do it anyway. I believe that one of the single greatest skills that wealthy people have developed is the ability to act in the presence of there fears. Notice that I called this a skill, which means you can learn it.

While different people have different tolerances for risk and fear, all of us can expand our comfort zone through the conscious cultivation of courage—the quality that keeps us moving in the presence of our fear. Every experience you have in any area where you feel fear and still find a way to take intelligent action in the presence of your fear grows your courage muscle.

There are the three main wealth building tracks that lead to financial freedom, each of which is the subject of three future Wealth Tips. In tomorrow’s Wealth Tip I’ll share with you important information about Level Three wealth building.

For more on Level Two wealth building see, The Maui Millionaires pp.186-189.

Wealth Tip 5: Level One Wealth Building—Your Time to Build Your Financial Foundation

If Level One is all about getting started, then the first step of a Level One wealth builder is to make the definite commitment that he or she will become financially free. The single most common reason that people fail financially is not poor judgment or lack of opportunity, rather it is the failure to make the decision to be financially free.

I am not talking about the wish or the desire to become financially free. I am speaking of the congruent commitment that you will become financially free, no matter what. This means that you both believe it is possible for you to be financially free and that it is a definite goal of yours.

From this point of decision, Level One is about building the rudimentary foundation of financial skills and knowledge so that you can move to Level Two and work to aggressively grow your net worth--intelligently and skillfully.

As a Level One wealth builder there are five specific action steps for you to take:

1. Determine how much money it would really cost you each year for you to become financially free. (See Wealth Tip 15 for more guidance on exactly how to do this.) This becomes your first financial freedom target—to generate the passive, residual income you need to meet this cost of living.

2. Begin today to invest a definite percentage of your income, no matter how small this initial percentage, for your future financial freedom. The key as a Level One wealth builder is not to become wealthy in one bold move, but rather to congruently make the shift to have a portion of your time, talent, and money invested for your future. There is a saying that where your attention flows, your energy goes, and your result shows. Well, taking a definite percentage of your income off the top to automatically invest for your future is a tangible way to get your attention off of debt and financial struggle, and instead focus on wealth creation.

3. Read or listen to financial books and courses for at least 60 minutes three times per week. There are only two ways to learn—by your painful trial and error or by the experiences of other people. Reading and listening to the right financial books and courses lets you benefit from the digested and organized experience of some of the smartest people on the planet in the area of finance and wealth building. Over the past decade I’ve consistently read or listened to over 100 books and courses each year. I credit this self-education as one of the most significant contributors to my financial success. It will do the same for you if you step up and get busy studying. The best investment you can make as a Level One wealth builder is in your own financial education.

4. Find a partner or group to mastermind with as you begin your journey. You have a long road ahead of your to build your wealth. There will be challenges, set backs, and successes along the way. The key is for you to have a team to turn to so that you will stay the course. Wealth building is a team sport and is much easier to do with the cooperation and active support of a community of other wealth builders. (This is one reason why Diane and I started Maui Mastermind™ Online to create the world’s premier online wealth building community.)

5. Don’t make any MAJOR financial commitments until you have both the financial understanding and financial team that can help you intelligently evaluate and execute that investment or business. In other words, as a Level One wealth builder you don’t yet have the financial sophistication to make major financial moves. Instead, delay these until you have progressed to Level Two.

So how long will it take you to progress from Level One to Level Two in your wealth building? For most people it will take 6-12 months, however if you really apply yourself you can make it in as little as 60-90 days, although this is pushing it.

For more on Level One wealth building see, The Maui Millionaires pp.186-189.

Wealth Tip 4: Determine which level of wealth builder you are

There is no one wealth strategy that fits all people. In fact, depending on the current status of your financial wealth building you will need to tailor your financial efforts in totally different ways.

There are essentially three levels of wealth building—Level One, Level Two, and Level Three.

Level One is about getting starting, and it is the subject of Wealth Tip 5 for most Maui Millionaires™ it takes 6-12 months to progress through this level.

Level Two is about aggressively growing your net worth, and it is the subject of Wealth Tip 6. For most Maui Millionaires™ it takes 3-10 years to progress through this level. This might seem like a long time, but compare that to the default plan in our society in which the average person works 40-45 years, then retires financially dependent on the government or family (if they are even able to stop working in the first place!)

Level Three is about converting your net worth into passive, residual cash flow. It is the subject of Wealth Tip 7. This usually takes most Maui Millionaires™ about 24-36 months to intelligently make this transition.

What happens next? For many Maui Millionaires™ once they have become financially free with plenty of passive, residual income and healthy net worth, they take a short break, and find the next challenge for them to become passionate about.

For me, after I “retired” at age 36 having sold one of my companies, I took four months off and got very bored. At that point I started up two multi-million dollar companies in areas that I felt very passionate about. Also, I made sure that I structured the businesses so that they supported my very flexible and free lifestyle (E.g. working no more than 30 hours per week, work from anywhere I want, etc.). Finally, I made sure that I built in a very large giving component into the DNA of the companies from the start.

The results? Well one of the results was Maui Millionaires, LLC. Not only does that company teach hundreds of thousands of people each year about financial mastery, wealth, and how they can become a Maui Millionaire™, but it also raises over a million dollars a year for charity. Level Three wealth builders isn’t the end, rather it’s the launching pad for Maui Millionaires™ to build an enduring legacy that will live on beyond their lives.

For more on Level One, Two, Three wealth building see, The Maui Millionaires pp.186-189.

Wealth Tip 3: Learn to Dream Big Again

All of us started out as children who loved to dream. As children our dreams were wild, crazy, bold, and visionary. But then life taught us to dampen our dreams and our expectations.

Well if you want to be a Maui Millionaire™ then it’s essential that you learn to dream again—the vivid, bold, ambitious dreams of youth.

What would you do if you were not afraid? What one dream would you dare to dream if you knew you could not fail?

Maui Millionaires™ have the courage to dream big, and the faith to step up and work to make these dreams come true.

For more on dreaming big and playing the Maui Millionaire Big Dream Game™, including how to download your free copy see, The Maui Millionaires pp. 81-122.

Tuesday, October 03, 2006

Wealth Tip 2: Fastest Way to Upgrade Your Wealth Operating System(TM) Automatically

Human beings are social beings. Over time we are strongly influenced by the belief systems and attitudes of those people we spend the most time with. This is a powerful fact if you use it and consciously choose to spend time with people who are a positive influence on you.

One of the reasons we are giving every reader of, The Maui Millionaires, a free copy of the Maui Millionaire Big Dream Game™ is so that you can play it with your mastermind team. Simply playing the game with positive people who are committed to living a truly wealthy life will automatically upgrade your W.O.S. each time you play.

Sometimes in life you can get more by relaxing, having fun, and working less. Playing the Maui Millionaire Big Dream Game™ is one of those times. We hope you enjoy it!

For more on playing the Maui Millionaire Big Dream Game™, including how to download your free copy see, The Maui Millionaires, pp. 119-122.

Wealth Tip 1: The Single Greatest Leverage Point to Your Wealth Operating System(TM)

Each of us has an internal program we run about money, wealth, and our ability to earn and enjoy it. We call this your Wealth Operating System™ or W.O.S. for short.

Your W.O.S. is the sum total of your emotional associations to and beliefs about money, wealth, rich people, and your ability to be one of them. Each of us was programmed in with a default setting for our W.O.S. through childhood influences like our parents, our extended family and friends, our teachers, the media, and our culture as a whole.

In order for you to step up to all the wealth that is waiting for you one of the most important steps you must take, if not the most important step, is to work to upgrade your W.O.S.

How will this impact you? Well take the example of John, a two time participant at Maui Mastermind™, an ultra-exclusive, five day wealth retreat we hold for a small handful of our elite clients. When John first came to Maui he had been investing in single family homes in San Diego for about 5 years. Over that time he had made hundreds of thousands of dollars buying homes, renting homes, and reselling homes. But he had dreamed of stepping up to investing in commercial real estate like apartment buildings for over 3 years but just hadn’t been able to make that jump. Within 3 months of going home from Maui John had closed on two apartment buildings! What was different? Didn’t deals like that exist before John went to Maui? Of course they did, but the difference was that after Maui John was finally able to see the deals that he had previously walked right past.

Your W.O.S. literally determines the opportunities and options that you have to create wealth. By upgrading your W.O.S. you are able to make creating wealth easy and automatic. I know this sounds like a big statement, but in my experience creating wealth and teaching hundreds of other people how to create wealth it is absolutely and irrefutably true.

For more on your Wealth Operating System™ including a 5 step system for upgrading it see,The Maui Millionaires pp. 19-78.

Monday, October 02, 2006

30 Day Maui Millionaire Countdown Explanation

Hi everyone,

I'm back! After a full summer off from posting and emailing (thanks it was a fun break... Heather and I travelled and I read and wrote a ton!) I am back on it!

As many of you already know, my new book, The Maui Millionaires, comes out on November 3rd.

As a special part of spreading the word, Diane Kennedy (my co-author) and I are hosting a 30 Day Maui Millionaire(TM) Countdown. Each day for hte next 30 days I'll have a new wealth tip for you! (I may do two days at once over the weekend :).

I hope you enjoy it.

Also I'll be sending out emails with Wealth Tips each week from now on. If you haven't registered at one of my sites, then just send an email to Judy@getrichgetreal.com and ask her to send the emails to you.

Have a great day and let the wealth tips begin!

David