5 Wealth Lessons From 20 Percent of a Millionaire (Blog)

[Lauxa]

I've heard before that if you want to be rich, hang out with rich people. So where do you meet rich people and what do you do together? I seem to attract only poor people into my life, usually people with less money than me. I know this is partly because I'm more comfortable with poor people, maybe because of low self-esteem and rich standards seem so much higher that I'm afraid I could never measure up. But still, do you join an investment club or something? I once took a class on real estate investing, but it's not really my "thing" and I certainly didn't make any long-term friends there.

[Zero]

Hmmm... I see that Steve is trying to make a point about "thinking big", but you have to take into account his perspective. He may have disposable income to burn. Some of us do not have this luxury.

Let's take the case of an average joe making 50K a year. What if that guy blows just $100 a week choosing the more expensive iPod, the more expensive gas, etc, etc. At the end of the year, you have spent $5200 trying to feel rich. But, that is after tax dollars. If you pay 40% in income tax, $5200 of after tax dollars costs you $8600 in gross income. The only thing you have done is turned a 50K a year salary into 41,400, and further separated yourself from a million dollars.

In this extreme example, you have spent 17.2% of your gross annual income to "feel" rich. Lunacy. (From my short time in the software industry, 17.2% is a conservative figure among many young professionals.)

I recommend *not* taking the advice in the article too literally. Although, some good advice is there (in spirit). I came to this realization a couple of months ago. The money I was burning to "feel" rich and fit in with other people with money serves me much better in investments & savings. I will have plenty of time to "feel" rich once I have boat loads of money in hand.

[Baltar]

Originally Posted by Zero

Hmmm... I see that Steve is trying to make a point about "thinking big", but you have to take into account his perspective. He may have disposable income to burn. Some of us do not have this luxury.

It's not at all about burning income. The advice is actually very good, but it seems that many people are misinterpreting it. For example let's say you want to buy a book that's available on amazon.com (which usually doesn't have the lowest prices, but makes up for this with huge selection). You might spend some time trying to find coupons, looking for other sites where it's cheaper, looking for it on half.com or ebay, and so on.

Steve is saying that instead of spending all this time to save $5, you're better off spending this time trying to figure out how to make $100 so that the $5 you would have saved becomes irrelevant. As you start making more money, you gradually raise what you consider to be irrelevant. So eventually you'll be thinking about how to make $1000 and then $50 becomes the equivalent of $5. This spiral can go up indefinitely.

How many of us waste time trying to save a few bucks? I've certainly been guilty of this until now. But now I realize that it makes a lot more sense to spend time thinking about how to make a lot of money than to try to save a little bit.

[SuccessPundit]

Originally Posted by Lauxa

I've heard before that if you want to be rich, hang out with rich people. So where do you meet rich people and what do you do together? I seem to attract only poor people into my life, usually people with less money than me. I know this is partly because I'm more comfortable with poor people, maybe because of low self-esteem and rich standards seem so much higher that I'm afraid I could never measure up. But still, do you join an investment club or something? I once took a class on real estate investing, but it's not really my "thing" and I certainly didn't make any long-term friends there.

There are lots of ways to meet rich people. My personal favorite is to start a service that caters to them. I started out in real estate investing by finding good deals for other major players in town. Then I moved to raising private money. Each service made me valuable to different groups of wealthy people.

Once people recognized that I was good at it, I started to get speaking requests for investor clubs and private events. Not only were those good for meeting people, but I was featured as an expert, which dramatically increase my credibility with people I wanted to get to know.

But none of it has to be that complicated. You can start with picking wealthy people and just inviting them out to lunch. You'll be surprised how often this works. Tell them you're getting started and you want advice from the best. Golf and poker games are also good.

Being uncomfortable with people more successful than you is fairly natural, but here's the more relevant question: do you like them? Would you enjoy hanging around them for five hours a week or more for the next 20 years? If not, then they'll be able to sense it and you'll have a lot of trouble.

Plus, you'll be miserable hanging around them if you don't actually enjoy it.

[hotwired]

Steve definitely did his job on this one. My thought process went into overdrive. I've been drowning myself in every book about the LoA lately. I'm indepndently wealthy already so I can view this from another angle. What I am struggling with is "reconciling". That is, reconciling the "belief" that "becoming a millionaire requires hard work" (and all related thoughts that go with the article) with "If you intend and don't resist, your intention will come to you quickly. 1 million is no harder for the universe to deliver than $5.00". Any thoughts on this? Steve writes about living congruently as well as how valuable the ability to hold "different beliefs" concurrently is. This is something I wish to learn more about, and would like to start with this one!

[The Wise Turtle]

I just read this article, enjoyed a lot of it (thanks again!), and I wanted to offer a different perspective, about the last section, that some might find useful...

From what I've seen, "trolls" are actually very interested in the ideas they argue so vehemently against. Just like the loudest homophobes generally turn out to be gay, it seems that the folks many people call "trolls" (be they internet trolls or financial trolls) are really desperately looking for someone to prove them wrong (in their eyes) so that they can accept who they are and move on to a more healthy relationship with themselves.

I've seen this time and time again with many of the people I know and love who many would consider trolls. I have a pretty good idea why they do what they do, and it's not random aggression at all, but is specifically targetted at some internal conflict that they themselves are having. (Psychologists call this projection, when one's own thoughts and feelings are projected onto another, because the thoughts and feelings are seen as alien and dangerous. People say to themselves "I can't be X, because I was brought up to believe that people who are X are bad. However, I sense that someone here is X, but it can't possibly be me because I don't want to believe that I'm a bad person, so... it must be you who is X! Or you! Or maybe you?")

Obviously, if you aren't trained in some sort of mediation, Buddhist practice, psychotherapy, philosophy, early childhood education, or other form of mental/emotional health counseling, you're probably not going to be able to help the troll and might end up hurting yourself if you try. (I guess you could say that those professions are into the "extreme sports" of human relationships!) So, as Steve suggests, stay away from trolls as much as you can, and don't engage them unless you are willing to get hurt, and understand what the risks are.

But it does at least seem to help when you realize that the more aggressive and antagonistic people (trolls) get about something on the outside, the less confident and more confused they really feel on the inside. So you can feel pity for them, rather than letting yourself get dragged down into their ever deepening pit of low self esteem!

Peace, Love, and Bicycles,
-Turtle

[Savage]

To the universe $5 and a million are no different. To the person attracting them though, there will be varying degrees of resistance. To receive larger amounts, more of a shift is required, which usually takes more time.

In a strange way, I feel as if the million manifested as soon as I intended it. But the process of its arrival plays out over time as I go through the shifts needed to claim it.

[Glass Joe]

Steve,

You may have already considered this and decided that it just wasn't the path you wanted to take to make your first million, but have you thought about starting your own publishing company? Something like "Pavlina Press"?

To get an idea of what I mean, the kind of people I'm thinking of include:

- Tim O'Reilly and his computer-related "animal" books.
- Tom Rollins and his Teaching Company audio programs.
- Earl Nightingale and Lloyd Conant and their Nightingale-Conant audio programs.
- Robert Kiyosaki and his "Rich Dad" series of products.
- Andy Hunt and Dave Thomas and their "Pragmatic Programmer" series of products.

All of the above example products, in my opinion, have a higher level of quality to them that aren't there *only* because of the particular author/teacher of that particular book/program. The publisher also adds it's own level of quality and value to each book or program that, I think, wouldn't otherwise be there if the author pubished their book/program somewhere else.

I don't know... Maybe you could make your first million by helping other people express their own unique ideas and techniques on personal development by providing them with an outlet and a platform for them to reach even more people than they could on their own. Similar to Nightingale Conant - Earl Nightingale had his own personal development ideas and he published his own audio programs (which are great BTW), but he also helped other people publish their own personal development ideas too.

[Scipio]

Originally Posted by Steve Pavlina in 5 Wealth Lessons

I also started thinking about what I could do with a million dollars. One idea I find very inspiring is to found a non-profit personal development organization, which would ultimately have thousands of individual groups all around the world. In structure I imagine it being similar to Toastmasters International, which has 200,000 members and 10,000 clubs worldwide. You could find a local group near you filled with people dedicated to helping and supporting each other grow, very similar to a mastermind group. In fact, the Local Groups forum on this site is a very basic first step towards the realization of that long-term vision. Forum members are already having local meet-ups in cities around the world. I’m so excited to see this happening. Best of all it’s 100% free for everyone.

Steve, so many people would find value in an online site that allowed people interested in personal development to meet up (or a group called "Masterminds" like Toastmasters but focussed on all aspects of PD). I would love to see that be a reality, but it's not something congruent with my purpose for me to create. You could probably do this if you wanted.

[J1234]

Steve,
I'm a bit concerned. You say your site earns $40k a month and that you've acquired $200k since early this year as a result of saving, investing and the valuation of various assets. If I'm doing the math correctly, I think that would mean that you are spending upwards of $23k a month.

For all I know you may be donating the majority of this money to charity, but at that price tag, I think it's time to seriously think about starting your own charity or granting organization. I think you should at least request scientific evaluations from your charities to make sure your money is going where it is supposed to go and the charities are actually promoting something effective. At 5 figures you can be considered a major organizational stakeholder and you should request some sort of accountability.

If most of the $23k is going to living expenses, I want you to seriously think about materialism and this statement: "98% of all pollution and energy usage happens pre-consumer."

take care.

[Savage]

Originally Posted by J1234

Steve,
I'm a bit concerned. You say your site earns $40k a month and that you've acquired $200k since early this year as a result of saving, investing and the valuation of various assets. If I'm doing the math correctly, I think that would mean that you are spending upwards of $23k a month.

Monthly business income at the start of 2006 was about 10% of what it is now. Try spending $23K out of that. Most of the year's increase occurred in the 4th quarter.

It's not like I'm on a fixed income plan here.

[J1234]

Sorry if I'm getting down on you, man. These things are just hard for me to understand especially when the numbers go wonky.

Let 1Q=3 months

3Q=9 months

9 months @10% $40K=$36K

3 months @$40K=$120K

12 month tot=$156K

Hmmm . . . how steep was the rate of traffic increase or . . . did you find 22% passive growth somewhere? If you did, please share.

I know you are not on a fixed income. I just have this nagging belief that to feel truly wealthy and independent, your monthly expenses should equal 1/3 or less of your monthly income. This way 1/3 of your resources can be dedicated to minimizing the impact of various liabilities such as emergencies, accidents, random illness, approaching retirement, massive economic slump, law suits, etc and 1/3 of your income can be dedicated to various upward mobility schemes such as education, business ventures, establishing family trusts, home ownership, etc. I conceptualize it as 1/3 for the present, 1/3 for a future you can't control and 1/3 for a future you can control. Call it OCD or financial yoga, but with my strange way of seeing the world, I really think it works.

So you can imagine my dismay when I see a highly intelligent, dynamic and interesting person, such as yourself, gives the illusion of spending upwards of 50% of his monthly income with no intention of approaching financial yoga. Needless to say, I was stressing out. I know that even people who earn millions of dollars a year can spend 100% of their income on clothes, make-up and toys . . . and then leverage out for even more . . . but I would hope Steve Pavlina, consciousness guru to the eagles, possessed a bit more savvy especially when integrating all of your beliefs about the environment, compassion, stress reduction, etc. A large part of me hopes that all intelligent people out there recognize the systemic links between all of these things and struggles for balance.

Like I said, sorry if I'm getting down on you, it's just hard for me to understand.

[Liara Covert]

People will do what they will do to earn money. I think once you discover your passion and devote yourself to developing that in ways that will help others, the opportunities to create wealth in your life will come. You simply need to learn to recognize them and act.

[Bruce Achterberg]

Originally Posted by J1234

This way 1/3 of your resources can be dedicated to minimizing the impact of various liabilities such as emergencies, accidents, random illness, approaching retirement

Based on his future plans for "Personal Development for Dead People" and "www.StevePavlina.rip", I don't think Steve plans to retire from personal growth. And he can't retire from his job, because as Steve says in his article, 5 Wealth Lessons From 20 Percent of a Millionaire: "what job?!?"

Originally Posted by J1234

[...] you can imagine my dismay when I see a highly intelligent, dynamic and interesting person, such as yourself, gives the illusion of spending upwards of 50% of his monthly income with no intention of approaching financial yoga. Needless to say, I was stressing out.

Heh, maybe you should leave the stressing out to Steve?

[trekr5]

Well said Bruce

[Chad]

I just wanted to say I found this article useful. When I read one of Steve's articles, even things I've already noticed, such as changing your perspective on what amounts to a lot of money, hit home more fully and in new ways. I'm amazed how insightful and useful so much of what he writes is to me.

Reading these posts is equally interesting. I find it so entertaining to think of $10,000, or $100,000 $10,000,000 as a small amount of money. It boggles my mind!

========================

Since his post was about money, I also wanted to bring up something I had noticed just in the last couple days regarding the common belief that debt is bad. I was taught this as far back as I can remember so it's been rather important for me. I was taught that debt is bad and if you have any you become trapped, unable to pay, and simply a bad person. I'd avoided any kind of debt like a plague until last year.

Now some people who are more enlightened about it well tell you it's OK to have debt, as long as it is invested in something earning a higher interest than you are paying. This seems to me a much more useful way of looking at it. After all, the worlds richest people have the most debt. Bill Gates probably owes billions. And how many business people have to borrow money to get their business going? a lot. Probably the highest earning investment is a business because it's return on investment is potentially very, very, very high. look at the founders of NetFlix.

But I was thinking, what counts as higher interest? The point of student loans is that your increased earning potential is worth more than the money you borrow and the interest it accumulates. What else, besides college, might qualify by that criteria? What if you took a loan to travel the world for a while and really experience what's out there? You can't really know what kind of interest that will pay. You could learn so much, experience so much more, go in an entire different direction in your life. What you learn may well pay off financially in the future. What if you get loans to dress better so you feel better about yourself? (BTW, don't worry, I don't have plans to travel to Madagascar in a $1,000 Gucci suit.)

What I believe makes debt bad for most people is that the money is in charge and not them. If you are in charge, you can have as much debt as you want, and your wealths (financial, emotional, experiential) well always increase. If the money is in charge or you believe it's in charge, debt becomes a fortress in which you are trapped; you were forced in and you have to struggle to escape.

I believe it demonstrates a faith in yourself to say, "I'm going to borrow this money to invest in myself, and the person I am in the future will be more than able to take care of it."

It's just an amazing new thought to me and I thought I would enjoy sharing it with you all.

Thanks again for your amazing contributions Steve,

Chad

[edmamula]

Hi Steve,

I don't have to tell you twice that perception is reality. When you say that making a million dollars is difficult, my brain screams that this is just another limiting belief. This relates well to your post on "Showing Up"...what are the odds of becoming a millionaire? There are things that we can do every day to show up for the task of becoming a millionaire. Showing up isn't difficult, but manifesting the intention isn't necessarily quick either. Making a million isn't easy or difficult; it's just another goal....making a million this year is a different story!

Nevertheless, I'll race you to a million ;-) You've got a head start on me. Anyone can check my progress at EdMamula.com