What Would I Do If I Were Starting From Scratch Building Wealth
Hi Everyone,
Things here in Hawaii are going great. The event is amazing so far. We've got one more day to go. It's been even more special this time because my wife Heather was one of our participants this year. I'll give you a recap of the event in a few weeks when I get back to the mainland.
But in this letter I wanted to share with you about a different topic--lessons I've learned along the way as I've built my wealth.
I imagined we were sitting together by the side of the pool here in Hawaii and you asked me, "David, if you were starting out all over again from scratch, knowing what you know now from having done it before, what would you do to build your wealth the second time around?"
It's an interesting and critically important question. And to the best of my ability, here is my answer.
First, I would know how doable it really is. The first time around I thought I could do it. I hoped I could do it. I dreamed I could do it. But if I were starting over again from scratch, this time I would know I could do it.
In fact, I would know I could do it not just because I had done it before, that's too obvious. I would know I could do it because of all the other people I've seen start with fewer advantages, fewer resources, who went on to create amazing fortunes for themselves. I didn't have all these powerful and positive references the first time around.
I've literally seen school teachers go on to build multi-million dollar portfolios; mechanics go from fixing machinery at less than $10 per hour to owning Level Three businesses that made them multi-millionaires; and highly paid but totally overworked professionals who quit the rat race and went on to create the Maui MillionaireTM lifestyle.
Knowing that it's possible would mean that I would not be so scared the second time around. Believe it or not, I slowed myself down immensely the first few years because I was just too scared to really play full out.
For example, when I started investing in real estate in 1997, that first year I could have easily picked up 20 more investment properties than I did. People were willing to almost give me their houses because the market had been so bad in San Diego for so long. Considering those 20 properties would have doubled in value over the next 4 years, that fear cost me several million dollars.
The same thing happened with my early businesses. I was too scared to call on the big clients or sell at the major conferences. I stayed in my comfort zone far too long. And that was simply a matter of fear. Fear of failure, fear of success, fear of the unknown. Don't ever think that I don't have to battle the same demons of fear and uncertainty you do. It's part of being human. But the second time around I'd realize that I didn't have to be so afraid of feeling afraid. I'd recognize, like I do now, that it's how I act in the presence of my fears that determines my results, not the absence or presence of those fears.
What has your fear cost you this time around?
Next, I would have stepped up my thinking and playing to do larger business and investment deals earlier. I stayed too long in my small niche of investing in residential real estate and being satisfied with small businesses.
Third, I would have made sure I more effectively and strategically planned, monitored, and directed my financial progress. I wouldn't have done things "investment by investment" but rather I would have created an integrated plan right from the start. Plus I would have made sure that I didn't fall in love with the active income my businesses generated, but that I also invested for passive and passive, residual income along the way.
Speaking of which, if I were doing it all over again today, I would be much more aware of controlling my spending, especially on taxes and lifestyle expenses, so that I got myself financially free as quickly as possible. Then from that place of financial freedom I would have grown my lifestyle out of my passive and passive, residual income.
Another painful lesson that I learned the hard way, that I would definitely do it differently the next time around, was that at a certain point when I had accumulated a significant net worth, I needed to shift my investing focus from creating passive income (think one time paydays like a capital gain you get when you sell an asset that you own for a healthy profit) to passive, residual income (think recurring money that flows to you each month or quarter without you having to work more than 10 hours per month to secure it.)
It's really only been in the last few years that I finally "got" that last lesson. For me, it was sparked when I sold one of my businesses. I got a BIG wire transfer for the business, but I lost the six-figure monthly income that went with the business. So there I was, on the other side of the "cashing out", only to discover that building wealth and transforming net worth into passive, residual income were two distinct skills.
I could go on and on with "lessons" I've learned this time around, but I want to end with one more key lesson. This lesson is a "given" for me know, but it most certainly was NOT when I started out in business 12 years ago.
So what is this final lesson? Simply this: It can happen faster than you could ever imagine, but will probably take longer than you dream.
What a strange thing to say, but in my experience it's totally accurate. You will be amazed with how you can literally go from zero to millions in as little as 36 months, but you've got to hold true to your dreams when you find that it takes longer than you dream it might take.
The average person dreams of wealth this year (in the next 30 days would be even better). Well, that's probably not going to happen. So most of them get started, don't see immediate results, and give up. They quit. They throw in the towel. And they settle.
If only you can get yourself to get started, but hold on longer than you think you can, learning as you go, it's amazing what you can accomplish financially.
My first year in business I made something like $35,000. Not a lot of money is it.
But within 7 years I was earning well over a million per year. My net worth had grown at the same pace (faster actually). What if I had done what the average person had done after such a dismal first year?
I would have quit after the first year saying that it just wasn't working. In fact, I could have made more money (income and net worth) working for someone else in year one... and in year two... and maybe even in year three... But by year four there was no way I could earn the kind of income and wealth I had created for myself by working for someone else.
These same lessons can and will work for you.
I hope these insights are useful for you. In fact, I have recently put up a new Maui MastermindTM Online audio workshop titled, The 10 Most Important Wealth Lessons I've Ever Learned. In it I go into much greater depth about the kinds of insights that I've shared with you in this letter so far. Maui MastermindTM Online members click here to access the class.
If you're not a member yet, click here for a free 30-day trial membership if you want to access the class (and dozens of other classes on investing, financial fluency, tax strategy, and building businesses).
*****************
Join me at Mini-Maui September 14th and 15th in Atlanta (and extend your stay and attend "Financially Fluent" workshop at the same hotel on September 16th and 17th!)
Click here for details and to register.
************
That's it for this week. I hope you enjoyed the ideas on "starting over" I shared with you. I know that if you apply them they have the power to make a big difference in your financial life.
My best to you,
David
P.S. Maui Mastermind Online members, click here to access the new updated audio workshop called, The 10 Most Important Wealth Lessons I've Ever Learned. Not a member yet? Click here to sign up now and get instant access!
P.P.S. If this article struck a chord with you, you have my permission to forward it to your friends or post it to your website or blog. All I ask is that you leave the links in and don't edit what I shared. Fair enough?
Things here in Hawaii are going great. The event is amazing so far. We've got one more day to go. It's been even more special this time because my wife Heather was one of our participants this year. I'll give you a recap of the event in a few weeks when I get back to the mainland.
But in this letter I wanted to share with you about a different topic--lessons I've learned along the way as I've built my wealth.
I imagined we were sitting together by the side of the pool here in Hawaii and you asked me, "David, if you were starting out all over again from scratch, knowing what you know now from having done it before, what would you do to build your wealth the second time around?"
It's an interesting and critically important question. And to the best of my ability, here is my answer.
First, I would know how doable it really is. The first time around I thought I could do it. I hoped I could do it. I dreamed I could do it. But if I were starting over again from scratch, this time I would know I could do it.
In fact, I would know I could do it not just because I had done it before, that's too obvious. I would know I could do it because of all the other people I've seen start with fewer advantages, fewer resources, who went on to create amazing fortunes for themselves. I didn't have all these powerful and positive references the first time around.
I've literally seen school teachers go on to build multi-million dollar portfolios; mechanics go from fixing machinery at less than $10 per hour to owning Level Three businesses that made them multi-millionaires; and highly paid but totally overworked professionals who quit the rat race and went on to create the Maui MillionaireTM lifestyle.
Knowing that it's possible would mean that I would not be so scared the second time around. Believe it or not, I slowed myself down immensely the first few years because I was just too scared to really play full out.
For example, when I started investing in real estate in 1997, that first year I could have easily picked up 20 more investment properties than I did. People were willing to almost give me their houses because the market had been so bad in San Diego for so long. Considering those 20 properties would have doubled in value over the next 4 years, that fear cost me several million dollars.
The same thing happened with my early businesses. I was too scared to call on the big clients or sell at the major conferences. I stayed in my comfort zone far too long. And that was simply a matter of fear. Fear of failure, fear of success, fear of the unknown. Don't ever think that I don't have to battle the same demons of fear and uncertainty you do. It's part of being human. But the second time around I'd realize that I didn't have to be so afraid of feeling afraid. I'd recognize, like I do now, that it's how I act in the presence of my fears that determines my results, not the absence or presence of those fears.
What has your fear cost you this time around?
Next, I would have stepped up my thinking and playing to do larger business and investment deals earlier. I stayed too long in my small niche of investing in residential real estate and being satisfied with small businesses.
Third, I would have made sure I more effectively and strategically planned, monitored, and directed my financial progress. I wouldn't have done things "investment by investment" but rather I would have created an integrated plan right from the start. Plus I would have made sure that I didn't fall in love with the active income my businesses generated, but that I also invested for passive and passive, residual income along the way.
Speaking of which, if I were doing it all over again today, I would be much more aware of controlling my spending, especially on taxes and lifestyle expenses, so that I got myself financially free as quickly as possible. Then from that place of financial freedom I would have grown my lifestyle out of my passive and passive, residual income.
Another painful lesson that I learned the hard way, that I would definitely do it differently the next time around, was that at a certain point when I had accumulated a significant net worth, I needed to shift my investing focus from creating passive income (think one time paydays like a capital gain you get when you sell an asset that you own for a healthy profit) to passive, residual income (think recurring money that flows to you each month or quarter without you having to work more than 10 hours per month to secure it.)
It's really only been in the last few years that I finally "got" that last lesson. For me, it was sparked when I sold one of my businesses. I got a BIG wire transfer for the business, but I lost the six-figure monthly income that went with the business. So there I was, on the other side of the "cashing out", only to discover that building wealth and transforming net worth into passive, residual income were two distinct skills.
I could go on and on with "lessons" I've learned this time around, but I want to end with one more key lesson. This lesson is a "given" for me know, but it most certainly was NOT when I started out in business 12 years ago.
So what is this final lesson? Simply this: It can happen faster than you could ever imagine, but will probably take longer than you dream.
What a strange thing to say, but in my experience it's totally accurate. You will be amazed with how you can literally go from zero to millions in as little as 36 months, but you've got to hold true to your dreams when you find that it takes longer than you dream it might take.
The average person dreams of wealth this year (in the next 30 days would be even better). Well, that's probably not going to happen. So most of them get started, don't see immediate results, and give up. They quit. They throw in the towel. And they settle.
If only you can get yourself to get started, but hold on longer than you think you can, learning as you go, it's amazing what you can accomplish financially.
My first year in business I made something like $35,000. Not a lot of money is it.
But within 7 years I was earning well over a million per year. My net worth had grown at the same pace (faster actually). What if I had done what the average person had done after such a dismal first year?
I would have quit after the first year saying that it just wasn't working. In fact, I could have made more money (income and net worth) working for someone else in year one... and in year two... and maybe even in year three... But by year four there was no way I could earn the kind of income and wealth I had created for myself by working for someone else.
These same lessons can and will work for you.
I hope these insights are useful for you. In fact, I have recently put up a new Maui MastermindTM Online audio workshop titled, The 10 Most Important Wealth Lessons I've Ever Learned. In it I go into much greater depth about the kinds of insights that I've shared with you in this letter so far. Maui MastermindTM Online members click here to access the class.
If you're not a member yet, click here for a free 30-day trial membership if you want to access the class (and dozens of other classes on investing, financial fluency, tax strategy, and building businesses).
*****************
Join me at Mini-Maui September 14th and 15th in Atlanta (and extend your stay and attend "Financially Fluent" workshop at the same hotel on September 16th and 17th!)
Click here for details and to register.
************
That's it for this week. I hope you enjoyed the ideas on "starting over" I shared with you. I know that if you apply them they have the power to make a big difference in your financial life.
My best to you,
David
P.S. Maui Mastermind Online members, click here to access the new updated audio workshop called, The 10 Most Important Wealth Lessons I've Ever Learned. Not a member yet? Click here to sign up now and get instant access!
P.P.S. If this article struck a chord with you, you have my permission to forward it to your friends or post it to your website or blog. All I ask is that you leave the links in and don't edit what I shared. Fair enough?
posted by David Finkel at 11:55 AM
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