Wealth on Any Income By Rennie Gabriel

Wealth On Any Income
Wealth On Any Income: 12 steps to freedom

­­Wealth On Any Income- Book Summary

Results are not produced just by taking random actions, but by taking actions within a framework designed to produce a specific result. This is what Wealth On Any Income author refers to as an Action Structure to Produce Results. Learn how to write a goal from the future, not for the future.­­

The challenge called ‘Pay Yourself First.’ You may have heard about this before, but not the way I’ll talk about it. This concept has worked for over 5,000 years and it still works today.

Dr. Jerry Buss said this is what he did. He worked 6 days and lived on 5 days income. He saved that extra day of income and used his savings to invest and then bought the Los Angeles Forum, the Lakers Basketball Team, and the Kings hockey team.

Don’t wait to feel a certain way before you take action. Your feelings will come from the actions you take.

Step 1. Plan Your Future.

How to set long term financial goals and the action steps to achieve them.

S.M.A.R.T. Goals

You also need to include how you will feel. This is one of the reasons why you want to achieve the goal. This is one of the most overlooked important ingredients in goal setting.

There are only two reasons why we do anything: We want to either avoid pain or we want to gain pleasure.

Table of Contents

The two most overlooked keys to achieving your goals.

1. Other people

It’s best to have other people involved. Share it with other people. Do not work on it by yourself. Have other people support you. Get outside advice and coaching. Find a mentor. Model someone you respect, get them to assist you.

Do you know why Moses was lost in the desert for 40 years on a trip that should have taken 4 weeks? He wouldn’t ask for directions. (I guess it’s a macho thing passed down for generations.)

James Prochaska, a University of Rhode Island professor, has conducted several studies on the effectiveness of support groups. In his book

Changing for the Good, he says 90–95% of the people who try to change on their own—without the support of a group or professional counseling—fail.

If you were a gambler, which odds would you prefer?

  1. Ask others for support or help; 90% success rate.
  2. Do it by yourself; 10% success rate.

Two ways to work with other people;

A. Coaching

People get coach because they recognize the value of having someone hold them to account, or hold them to a higher standard than they have yet to achieve.

Coaching is designed to empower you to use more of the talent you already have, to apply more of your skills and abilities, to break up the limiting thinking which may hold you back from applying those skills and talents, to support you in making choices which can alter the quality of your life.

B. Speak to Others

Another way to evaluate a choice, besides our own experience, is to use the experience of others. We don’t have to get beat up as we learn things if we’re willing to see what worked, or didn’t work, for others. The key is to determine how similar you are to the frame of reference you’re using.

2. Tracking Results

The Five Year Financial Plan

What I want you to do now is divorce yourself from the present. I want you to stand in the future of what you want and write a goal based on what you want. By so doing you are creating what Wealth On Any Income author call The Action Structure to Produce Results. You’re writing down what you want and the time frame for having completed certain milestones, figuring out what you have to do to get started, and talking to people who can assist you.

Write down specifically what you will do tomorrow.

Section II: Attitudes and Roadblocks to Financial Freedom

Step 2. Recognize Good Debt from Bad Debt

Bad debt

This is consumer debt. The word consume means to use up, waste, squander, destroy totally and ravage.

When you look at what your neighbors are doing, your extended family members, the people you work with, or even the people you go to for advice, you’ll see they’ve bought into a system which will have them be wage slaves for the rest of their lives.

They have been sold the idea they can buy now and pay later. They can have any car they want, furniture, clothing, vacations, homes on low easy monthly payments. How is it easy is it to pay 200% to 300% of retail?

They are trapped in their job or career because of the monthly payments which have to be made month in and month out, year in and year out. Retirement is unrealistic.

Good Debt

Be aware, not all debt is bad. When someone deposits money in the bank, they are loaning money to the bank. The bank uses the money they have borrowed to make a loan to someone else. The bank is using good debt. They’ve borrowed at one rate to turn around and make a loan at a higher rate (spread).

Excessive debt comes from wanting—and deciding to get everything—now! Debt obligates your future income, it’s expensive, and the interest payments work against you. It easily leads to overspending. You have probably experienced getting into debt is much easier than getting out of debt.

Step 3. Beliefs and Values

Belief Statements We Need To Deal With.

Here are some of the thoughts/beliefs which can keep us from creating financial prosperity and freedom.

Thought/Belief #1: More money will buy the happiness I’m missing now.

In Your Money or Your Life, Joe Dominguez and Vicki Robin talk about this idea in great deal.

Thought/Belief #2: Budgets and spending plans are the same thing.

A spending plan is based on how much money you want to spend in some area or category of your life. It is not based on how much money you will be restricted to, as in a budget.

A spending plan is based on our values, the long term goals and objectives we’ve created. It’s designed to monitor and support us in spending money in alignment with our goals, objectives and values.

Thought/Belief #3: If I just made more money, I wouldn’t need a spending plan or budget.

Thought/Belief #4: This will take too much time and restrict my spending.

Are you willing to spend 5-10 seconds to see where your money goes?

Thought/Belief #6: Rich people don’t have to do this. I shouldn’t have to either.

The Millionaire Next Door by Stanley and Danko, they have studied 500 millionaires for over 20 years, and this book documents their findings.

To quote from the book:

“They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way.”

Step 4. Acknowledge the Six Roadblocks to Financial Independence

There are six roadblocks which can slow down your progress to creating financial independence:

Debt can slow you down from creating financial independence.

Economic conditions deal with inflation and recessions.

Tax – The more you know about the income tax code, the more money you will save and the more money you will have available to invest for your financial freedom. Take advantage of financial planners, CPA’s (Certified Public Accountants) and others who know the tax laws if you don’t want to know this yourself.

Asset & Risk Management / Frauds are areas that represent tremendous opportunity for either growth or major setbacks.

This involves insuring what you can’t afford to loose, and investing in areas where you won’t be ripped off.

Human problems are the items such as sickness, disability, death or divorce which can cause a slowdown in the creation of financial freedom.

Procrastination is one of the largest roadblocks to financial independence.

Section III: The Tools

Step 5. How to Get Out of Debt Without Pain

Wealth On Any Income author suggest the book by Jerrold Mundis called How to Get Out of Debt, Stay Out of Debt, and Live Prosperously.

Do not add any new debt while paying off your current or old debt.

Tool #1 The Debt Elimination Form

Here Wealth On Any Income author suggest you pick debt that has the lowest balance, and may have the highest interest and send extra money to it, until you is fully paid. Then you apply all the extra money to the other creditor this is how this tool works.

Step 6. Find out where you are today

Tool #2 The balance sheet

This next tool is called a “Balance Sheet” and represents a major step in creating financial freedom: Finding out where you are now.

With this tool (balance sheet) you’ll look at everything you own and everything you owe.

To understand more about read Rich Dad, Poor Dad by Robert Kiyosaki.

Step 7. Getting to Where You Want to Go

Tool #3: The Cash Flow Form (Spending Plan).

Income

If you get regular paycheck as your only source of income, you net income which is the amount after taxes and other deductions. This is the amount you have to live on. How you spend and invest that amount is important, it will determine if you will be poor, middle class, or wealthy.

The middle class use their income for expenses plus liabilities such as a mortgage, consumer loans, or credit cards.

The wealthy use their income to purchase assets which generate income, such as rental property, stocks, bonds, intellectual property, or notes. The wealthy have their income come from things like rents, royalties, interest, and dividends. You can learn more by reading Rich Dad, Poor Dad by Robert Kiyosaki.

Tool #4: The Spending Plan

Cash Flow Memory Jogger

As an example, someone might say, “I don’t buy clothes or spend money on entertainment. I don’t have any expenses there.” But they do if they go to the dry cleaners or laundry. Those are clothing expenses. They do if they buy books, magazines, CD’s, rent videos or pay for cable TV. Those are entertainment expenses. You see that is wakes your memory.

Step 8. How to Use the Most Powerful Tool to Track Expenses and Measure Your Pleasure

Tool #5: The Financial Coach Spending Plan Register

When you fill out The Financial Coach Spending Plan Register for the first time, use it to find out where your money is going. It helps you to know where money leaks out during the month. It may be meals out, groceries, clothing, transportation expenses or entertainment.

Step 9. What To Do When Expenses Exceed Income.

When income and expenses don’t balance, you have to look at three areas. To clean this up you will look at the;

  • Discretionary
  • Variable, and
  • Fixed expenses

Discretionary expenses are the ones you have complete control over. It may be going to the movies, meals out, personal trainer, vacations or clothing. Anything you have complete choice over is a discretionary expense.

The next area to look at is Variable expenses. These are the expenses which show up month-in and month-out.

The last expense area to look at is the fixed expenses. These are the ones that come in every month and don’t change.

If you want to read more books similar to Wealth On Any Income, you can do that here.

Step 10. Creating Financial Freedom

Financial freedom is having work as a choice instead of a requirement, or money at work so you don’t have to work. This is the point in time where you don’t have to depend on anyone else for your income, and I expect you to be debt free. You’ll be independent of a job, career, and even free of government support. You will have a level of income from your investments which will cover your standard of living. It could be as simple as food, utilities, minimum taxes, entertainment, travel and contributions to the communities or organizations of your choice.

The first way could be to pay all your expenses first, and then if there’s some money left over you save it.

This is not a trick question: What might be some good reasons for saving money? Obviously since we’ve been talking about financial independence this could be one reason.

“Should I be saving 10% of my income now, when I have all this debt I need to pay off?” My answer is yes and no. What I’m suggesting is you still must pay yourself first. It may not be 10%. Maybe it’ll be 4%, or $10 per week. But pay yourself something first. This will become very clear later on when I discuss the very high cost of waiting to invest.

“Do you deserve to own some of the money you’re earning?”

If you do, Prove it! Pay yourself first. Pay yourself before you pay the telephone bill, the groceries, rent or transportation expenses.

Maybe you’re saying, “I can’t pay myself first and have the money I need to support my standard of living.” Here’s what I’ve seen. Someone pays all their bills one month, and among them is a phone bill for $50. At the end of the month there’s nothing left. The next month they pay all their bills and among them is a phone bill for $75. Somehow they manage to pay the phone company an extra $25. What’s missing here is putting yourself at the top of the list before the bills are paid.

Again, there is a psychological shift which occurs when you treat yourself like you deserve to own some of the money you earn. It allows you to generate more money. You no longer see yourself as a pipe, with money flowing in one end and out the other. The feeling that ‘no matter how much comes in, you still won’t have anything’ will be eliminated when you pay yourself first.

Step 11. How to Handle Emergency Spending (Without Creating a Financial Disaster)

You can set aside 40–60% of the money you pay yourself first into long-term savings or investments.

In order to create financial freedom, and pay off past debts, and be prepared for future expenses, you must not only spend less than you earn today, you must set a portion aside for tomorrow. Working with thousands of people I’ve discovered the following: About 10–20% of what people earn needs to be set aside today to be spent later.

It shows 40% to long-term savings and investments and 60% to spend later. I’ve found this to be a typical allocation based on the 10% and 15% from the previous paragraph. If all you can start with is to set aside 10% of your income, then 4% would go to long-term and 6% would go to spend later.

What are some of the ways you could be paying yourself first and putting it away for long-term use? You could put it into a mutual fund by dollar-cost-averaging, a life insurance policy (whole life, universal or variable life), payroll deduction into a credit union or 401(k) plan, or automatic withdrawals from your checking account. You could be saving up for the down payment on your first or second piece of real estate. 40% of the money you pay yourself first will never leave your hands again, unless it’s going into an investment which will be a part of creating your financial freedom.

It’s not so important how much money you earn, it’s what you do with it that makes the difference!

Step 12. Create A Prosperous Financial Future

You create a prosperous financial future by putting money to work.

This is where, or how, financial freedom is created. It is not achieved just from spending less, getting out of debt, or making better purchasing decisions. It is created by taking the money saved and investing it to produce a stream of income so you no longer have to work. This is where you have money working for you, instead of you working for money.

How to Guard Against Investment Fraud

How to avoid being a victim of investment fraud:

1. Develop a coherent investment strategy tailored to your own circumstances. The development of realistic investment goals is worth the effort, not only for its own sake, but also because it results in a healthy skepticism that con artists dread.

2. Select investments to fit your goals. Do not settle for what someone wants to sell you. Even in times of economic uncertainty, solid investment opportunities exist.

3. Choose a professional advisor as carefully as you would select a million dollar investment. Refer to the questions on how to pick an advisor in a previous section.

4. Keep your guard up. Be aware that there are people who want to live well on your money and they may look and sound as respectable as anybody else.

5. Have a good defensive strategy. Use other professionals you trust to review investment offerings in which they have expertise.

6. Never send money, or give your credit card number, to a stranger on the basis of a phone call.

7. Before investing in a new stock offering, read the prospectus— especially if the promoter tells you not to bother.

8.Don’t take exaggerated promises at face value. If such great returns are real, why would they share the secret?

9.Do not be hustled by high-pressure tactics. The investment world is not going to run out of good opportunities in the next hour.

10. Beware of hucksters who claim they’re doing you a favor because you’re a member of a particular organization, church, or group.

11.Do not assume state or federal regulators can protect you. They are far outnumbered by the scam artists.

Wealth on Any Income: 12 Steps to Freedom by Rennie Gabriel was published by Gabriel Pubns in 2006. The book has 208 pages.

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