Leverage to Lift Your Profits

Today I’m going to continue talking about making those huge returns that I touched on last week. Remember, with only a $30k salary and saving just 10% for only 5 years, you can bring in as much as $21 million dollars by age 70! How is it done?  It’s done by using two different types of leverage.

No. 1: Financial leverage. This is Other People’s Money (OPM) as in mortgage loans, personal loans, signature loans, loans from family or friends, or even through having family and friends as partners.

No. 2: Labor Leverage. This is Other People’s Efforts (OPE). You bring on other people, including employees, part time contract labor, day laborers, contractors and the like, to do the fix up work that will create added value in an asset.

Basically what these two types of leverage can do for you is help lift something that is bigger than you can take on yourself. To paraphrase what Archimedes said, give me a long enough lever and a place to stand and I could by myself lift the earth.

Using these two levers is exactly how it is very possible to receive a return of 15% or 20% or even more, turning a meager income of $30,000 into $21 million! The math is pretty simple. As I said in my July 25th blog, if you go out and buy a $500,000 dirt bag type property, one that needs some fixing up, and do this with a $100,000 down payment (a down payment that itself may be borrowed) and then go out and use some OPE and improve the value by $50,000, that gives you a 50% return on your money,

But of course it will have cost you something to fix it up. Let’s say it cost $30,000 in material and labor to fix it up. That puts you at a 20% return. Now keep doing that on additional properties and you’re looking at a cool 21 million by the time you hit 70 years old. Let me emphasis that you can only do this if you control your own money and do the work or have others do the heavy physical work.

Anytime someone comes along and offers you a 20% or 30% return on your money without you doing a thing, grab your wallet and check book and run away as fast as you can.  These very high returns are possible but, for the most part, only with your efforts or the efforts of other people that you control.

Think of it this way … if you are making 30% or more on most every deal you do, why would you go tell others about it? Wouldn’t you just borrow more money at 5% or 6% and take home the difference? You certainly wouldn’t give someone else a big fat return of 20% or 30% in passive income for not doing a thing to help.

I’m not saying these returns are easy and take no effort and there are other details such as income tax that will eat into that profit (although there is a way–see the IRS 1031 section of the tax code to help delay some taxes) so these numbers aren’t exact. But what I am saying is that it doesn’t take as much savings capital as most people think.  In fact it takes relatively little savings to reach some very big financial levels.

By the way, I’ve had more than a few deals that have topped the 100% return level. Compound that for a few years and your eyes will pop out! That’s the potential. Now, doesn’t that get you motivated?

 

The Magic 10%

Last week I wrote about the basic and beginning key to great wealth for those of us who start out with nothing, like I did. That key is ‘savings’. A couple days after I posted last week’s blog I saw a great summary on ways to save money in the USA Weekend Publication. Its suggestions included things like buying a used car rather than a new car, always shop for better bargains, set spending goals and budgets, refinance your house at today’s lower interest rates and more. These are things I’ve always preached. It comes down to buying only what you need vs. what you want and mistake for things you need.

It might be easier to put away that savings if you take a look at the huge potential in that 10% you are putting aside. I know it seems simple to put aside 10% but for most people it’s not that easy. In my book The Next Step to Waking Up the Financial Genius Inside You I talk about how to save that 10%. Many years ago when I was making a starvation wage of $600 dollars a month, I was faithfully saving $60 dollars each and every month and then when I got a $40 dollar raise I decided to add the entire raise to the $60 dollars–so I was saving $100 dollars out of $640 or 15.6% of my monthly income. Yes it hurt sometimes because I had to go without things I wanted, but was it ever worth it in the long run.

You would do all of this if you truly wanted to be very wealthy rather than just being like everyone else who lives paycheck to paycheck. But now let me reveal to you a little fact that may entice you, shock you, and motivate you to do the ‘savings thing’.

Back when I wrote the third chapter entitled “Action Two, Saving the Magic 10 Percent” I had a friend who was paying a 10% tithing to his church and when I pointed out to him what he was really giving up he was shocked to the core. Please don’t get me wrong. I am not against charity but the thing is, if you want to be independently wealthy, you must pay yourself first. What I told him was that If you start at age 25 saving 10% of your wage, and assuming you only make $30,000 dollars a year and (get this … you stop saving at age 30) you will have over 7 million dollars when you hit age 70! And believe me, that big 70 comes much faster than you think!

Granted those numbers all depend on you investing your savings with an annual compounded return of 15% but wait before you jump to conclusions and think 15% is unrealistic and can’t be done, because it can. If you work harder and find the right deals you could even push that rate of return up to 20% which would be an astounding 47 million dollars by age 70. Amazing, isn’t it? Next week I will show you exactly how to do that. I’ve gone over this before but its well worth repeating.

Wants are not Needs

Ok, let’s talk about money.

A few days ago I was thumbing through a book I wrote back in 1983, The Courage to be Rich, when, in Chapter 4–The Fallacy of Working for a Living, I found a quote from a guy by the name of Joe Karbo (who, sadly, passed away from a heart attack at the young age of 55). The quote was: “Most people are so busy earning a living they never make any money.” What Joe was saying is that most people are ‘wage slaves’ and never figure out that the key to wealth is really not your earnings or wages. Yes, wages have a part to play but only if you do the right things with a portion of your wages. Your wage doesn’t have to be huge but the key, of course, is saving some of it and setting it aside then letting it build up enough for you to make the right investments.

Of course, the problem with most people is they don’t use enough discipline to control their spending. They think there are things that they just have to have now such as a new dress or car, a fancy night out on the town, an extravagant vacation, etc. I find it very interesting that people choose words like ‘need’ rather than the more accurate word ‘want’ when talking about the things they spend their money on. There is a huge difference between our needs and our wants. Most of the things we think we need are really just things we desire. We all need water, food, shelter, clothing and a certain amount of security to survive and have the chance to thrive. If you take time to think it through, you will be able to see the difference and if you really see the difference, you can then choose to set aside those wants that you previously thought were needs. That will get you the money you’ll need to save up in order to invest and get ahead.

What I used to do when I was depriving myself of a lot of extras that I really wanted right then and there was to concentrate on the huge benefits that I would be receiving later on. I would focus on two wonderful words: ‘passive income’. That concept of having income that would come in automatically each month, whether I got out of bed or was vacationing in Europe, would really motivate me to not spend on things that were wants and to keep saving more and more of my wages. And it paid off big time. Now I spend a lot of time traveling the world and doing super fun things without worrying about the money. It comes in every month no matter where I am or what I’m doing.

It’s so funny how often I hear, “Oh Mark, you are so very lucky to have such a great life style.” They probably don’t mean that literally, but I always respond with the same thing, saying, “Believe me, it’s not luck. It was good planning and discipline over a long period of time.”

Friends, pretty much anyone can do what I did. It does take time but it’s so very worth it. If you think you are too old and don’t have enough time to do it at least pass the message on to your kids and grandkids. They will thank you and greatly benefit for many generations to come!

Finding Our Higher Selves

On Monday I was feeling down. I had no energy, my bones were still aching from a loss in the finals of a big tennis tournament, and I had a big headache complete with a loud ringing in my ears (which has gone on for many years, but I usually mentally block it out.) The bottom line … I was absolutely miserable. Then came the phone call. It was my darling wife Kimberly. She was so upset and crying that at first I couldn’t understand what she was saying. When she calmed down she told me that she had just received a suicide note from a dear and sweet lady that she is very close to. This wonderful lady has had some tough times and huge ups and downs lately and now just wanted out of life. She just wanted to “fly away”.

In a great panic we set out in separate cars to try to find her. We both ended up at the lady’s house. We banged on the door, rang the doorbell and finally we were able to enter the house after finding a hidden key but were afraid of what we might find. The house was dark and the power was off. Quickly searching the house with the aid of a cell phone light we found nothing.

After making many calls to friends, her ex-boyfriend called to say he’d spotted her car. My wife rushed to the location and found her a bit confused, very upset, and shaken up but alive. She is ok now and we are working with her and with professional help to show her life is worth living and to ensure  she does not get to that point again.

But now as I look back at that day and how my own day had been going, how down and out I was feeling, and how suddenly within mere minutes that all changed, I see a huge life lesson. It’s a lesson I hope I will not soon forget. The lesson is simply this: when we are in the service of others and as we are trying to help others in need, we can quickly forget about our own problems and troubles and rise to a higher level, to our higher selves. This is the lesson I hope stays with me for life and a lesson I want to share with others and I hope you the reader do the same thing.

Turning a Liability into an Asset

Have you ever been in a room when someone walked in that totally dominated everyone’s attention?  Someone who stood out so much that you could only stop and direct all your attention to that person? That is exactly what you get when Mark Eaton walks into any room. Why would you take immediate notice of him? Well, for one, he’s hard to miss standing 7 foot 4 inches tall! But that’s not all. If you are fortunate enough to hear one of his lectures, he’s even more of a standout as a speaker with a great message.

If you followed basketball a few years ago you know Mark Eaton played for the Utah Jazz, ending up as an all American and breaking the all-time NBA record for the most blocked shots. You might assume he had an easy trip to the top, but that’s very far from the truth.

Recently I was privileged to hear him speak–his wonderful wife Teri talked me into it–and from the lecture he so eloquently delivered to the audience I learned some great lessons and concepts. His spoke primarily about corporate team building but the thing that hit me so very hard was his words about how a person can turn a liability in life into an asset.

You see, for all of his younger life his height was a huge liability–he was teased constantly and called names. Yes he was on his high school basketball team but he sat on the bench virtually the entire season as he watched the little speedster guys rip up and down the court. He actually really hated basketball.

So what did he do? He studied to be an auto mechanic. But thanks to a great mentor he met when he was in his 20’s he was directed, coached and shown how he could turn what he perceived and thought of as a huge liability into a gigantic asset. His mentor showed him what he needed to do to play great basketball and Mark worked hard and long before he got to where his mentor wanted him to be. He went on to set records in the NBA and helped the Utah Jazz move from the very bottom of the league to the top. Now he’s doing it again as an all-star lecturer, speaking from coast to coast.

After hearing his story, I couldn’t help but think of a very dear high school friend, Richard Harvey, who played with me on our basketball team in the faraway country of Turkey. About 12 years ago I got a phone call from Rich telling me his son Kyle who was just 14 years old had bone cancer. Wow, what a shocker.

Kyle had a very tough battle. He fought it with all he had and eventually defeated cancer. However, the cancer had left its mark, stunting Kyle’s growth. Today, at age 26, he’s just barely over 5 feet tall and he looks like a little kid. Big time liability, right? For most people it would be and it was for Kyle for a while as well. But Kyle eventually turned that perceived liability into a huge asset.

He made a move from the mid-west to Los Angeles and got a job as an intern at Paramount Studios. But that only lasted a short time. He floundered around the city, trying to find an affordable place to live and another job. He finally caught a break, auditioning at a comedy club with jokes about his short body and very young looks. They loved him and he’s gone on to do very well there. He even got big kudo’s and congratulations from big time comic and actor Sinbad. He bravely turned what had seemed to be a liability into a huge asset.

And that, my friends, is really the long and short of it all. I think we should all take a look at ourselves and those around us who we may be able to help and see if we can take what we think is a weakness or liability and come up with a way that we might be able to turn it into a big asset.

Live and Leave a Legacy

The great Arthur Ashe left a wonderful legacy, not so much as you might think from his champion tennis days but more for his amazing kindness, sharing and selfless giving and his gentle warm personality that moved people to accept that every human being is equal. Believe me, back in his early tennis days, black people were not thought of or treated anywhere near equal. In fact, in some areas it was against the law for a white person to play tennis with a black person.

When you read about Arthur Ashe or watch the documentary on his life, you keep seeing these same words over and over to describe him–thoughtful, kind hearted , great role model, warm, gentle, friendly, fair minded and so very concerned about other people. He made a huge difference in the world and is a great example and role model for the rest of us. But you know what? Anyone of us can do similar things if we set our mind to it.  That, believe it or not, brings me to the subject of money.  Arthur Ashe used tennis and the fame he received from that as a lever to do good in the world.  The same thing can be done with money!

Money is neither good nor bad.  I know many people think that money is “the root of all evil” and they claim that this is what the Bible says, but this is not what the bible actually says. It says “the LOVE of money is the root of all evil.”  The real key, of course, is what you do with that money.  If you let money become your god or the end goal in and of itself rather than a means to the end you might well be in big trouble.  I’ve seen this happen many times. Someone will make tons of money and then spend and lavish it all on themselves with high end toys, jewelry, food, drink and drugs and then you see that love of money really does become the root of evil that arises in these people’s lives.

If you want to help humanity for many years to come, way past your own lifetime, then you need to devise a plan that does exactly that.  I’m not saying that you have to have huge amounts of money to leave a great legacy fro mankind but it sure helps. I don’t know about you but working hard to make a lot of money–especially past the point of making enough to just live on–is much easier, seems like less work and is more rewarding when I know that the extra cash and net worth can, and will, be directed to others in need. And not just for the here and now but long after I have checked out of this life. Call it extra motivation, extra energy or whatever you want to call it. It’s real and it can help keep you going.  That ‘legacy’ can also spill over into the future for many, many years after you are gone and may even get bigger as time rolls on.

Try to pretend that this is the only world there will ever be–as in there is no after or next life.  If that were the case–and it might be–and you still really want to live forever, then maybe the only way to do it is through what you do for other people.  First your kids and grandkids, then maybe your friends and associates but why not go way beyond that and try to help total strangers and anyone on the planet that you can reach, especially those that are in desperate need.  If you can motivate them to make their lives and their kids’ lives and their kids’ kids’ lives a little better, encouraging them to pass it on or ‘pay if forward’ forever into eternity, then I think you may see that you are living forever. Just one person has the potential to make the world a better place for numerous other people and that is one terrific legacy that you can leave as well as live.

Lessons from Arthur Ashe

Many years ago when I first started to play tennis I was so gung-ho about the sport that I traveled to all four of the major grand slams–Wimbledon, the French Open, the Australian Open and the U.S. Open in New York City.  I was so very impressed with the great champion Arthur Ashe and so admired him, not only as the number one tennis player in the world for a time but just as much for how dedicated he was to improving the lives of everyone, especially the unfortunate of the world.  To me he was an incredible double champion!

I will never forget, as long as I live, that night when the last match at the U.S. Open in New York finished so very late.  As I walked out of the stadium (the very stadium that has now been named “The Arthur Ashe Stadium) to catch a cab, I was surprised to see there were only a few cabs left and tons of people heading toward them.  So being quite young I sprinted to try to catch one.  I barely made it to the last taxi, but as I opened the back door and jumped in, someone else was doing the same thing on the other side.   As both doors slammed shut I look over to see none other than Arthur Ashe as my seat mate! Man, oh man, was I ever surprised, startled and yes, quite frankly, “star struck”. We quickly agreed to share the ride since we were both heading for mid-town Manhattan.  On the ride there I picked his brain to get all the tennis and life coaching I could possible pull out of him in that 45 minute ride.

What a great experience that had been and what a great man he was.  He was so much more than a world champion tennis player.  From a young age growing up in a segregated society, he set about to help change the world by helping people and thus making the world a better place for all of us.

Earlier yesterday, I was struggling to come up with a topic for this week’s blog and as I was thinking about possible subjects I flipped on the TV. Yes of course, the tennis channel was on and there was a biography being shown on Arthur Ashe including his many victories in his tennis life as well as off the court and his sad and somewhat sudden death at the young age of 49.   So it was an easy decision for my blog subject.  What great lessons I began to learn from his life as I watch the commentary.  He did a lot more in those short 49 years than I ever realized.  So much more than I can put in this one blog, so I am going to tell you more about his life and the impact that it had on the world in the next blog.

For now, the take away I want to leave you with is this–if you are looking for a big life time goal that will energize your life, I suggest you first take a look at yourself and see what your talents are and what you like to do and then spend time figuring out how you can direct those talents to make a difference in the world.

When we are young most of us are pretty self-centered and most everything we do is directed at just helping ourselves, but as we grow older and a little wiser we see that helping others is not only very satisfying but it can make the world a better place for everyone for many, many years to come.

 

Letting Your Mind Support Your Healing

I think most people know what the “placebo effect” is and how it works. Researchers that study the brain-body connection have shown in numerous experiments how the brain can be tricked into believing that a simple sugar pill can relieve pain or cure certain illnesses if the person is told and believes that the pill that is being taken truly is genuine medicine.

Our brains are so powerful. They can make physical changes in our bodies beyond what we would normally give them credit for or realize. Last week I was re-reading a book I’ve talked about many times before called Super Brain and I discovered a super concept that I must have skipped over in earlier readings. What the authors, Depak Chopra and Rudolph E. Tanzi point out that really jumped out at me is that any of us can, if we so chose, set up or create our own placebo effect at any time and without any sugar pill or any other kind of pill. (By the way, the word placebo is a Latin word that means ‘I shall please.’)
Chopra and Tanzi explain that “the effect isn’t limited to drugs, which is important to remember: anything you believe in can act as a placebo.” The authors go on to ask the question concerning patients that took the sugar pill “Where did the patient’s relief come from? It came from the mind telling the body to get well.” The body really believed what it was being told and then it relieved the pain or healed the sickness. In other words, your mind can and does control healing of all kinds including pain, disease, and wounds that our bodies deal with from time to time.

These authors go on to say “Being your own placebo is the same as freeing up the healing system through messages from the brain. All healing is, in the end, self-healing. Physicians aid the body’s intricate healing system (which coordinates immune cells, inflammation, hormones, genes and much else), but the actual healing takes place in an unknown way.” Wow. That’s a very powerful thought and one that if we take time to think about it and make use of it, can do some pretty amazing things to help us take care of ourselves.
Using the mind-body connection certainly takes a lot of work inside the brain but when you think of the huge possibilities you can quickly see that it’s certainly worth the work and effort. One of the conclusions that the authors suggest in conquering and taking advantage of the mind-body connection is summed up in this sentence: “In serious illness, doubts and fears play a marked role, which is why a practice like meditation or going to group counseling has been shown to help.” That is certainly worth trying for most, if not all of us, whenever we want to cure our pain, problems or disease. It’s probably a very, very good thing to do on a regular basis.

The authors suggest that there is a method through which anyone can apply their own placebo effect. It requires the same conditions as in a classic placebo response:
1. You trust what is happening.
2. You deal with doubt and fear.
3. You don’t send conflicting messages that get tangled with each other.
4. You have opened the channels of mind-body communications.
5. You let go of your intention and allow the healing system to do its work.
Our bodies have an amazing ability to heal themselves. When we get a cut finger or knee we slap on a band aid and know that it will heal itself. In doing that, we’ve just let our brain send a positive message to our cells to do their job. But when we get a serious disease we let our minds jump into the mix with all kinds of worry and negative thoughts doing pretty much the opposite of the list above. The bottom line here is if were are going to benefit from our own built-in ‘placebo effect’ we’ve got to, at a minimum, follow the list of 5 conditions above. If you can do that, you are supporting your body’s ability to take care of you, as it is supposed to do.

144 Years … or Close to it!

“Multi-Millionaire dies at Age 144!”

That was the audacious headline of a full page article in Denver’s Rocky Mountain News that ran many years ago. It was not exactly an article but it looked like one. It actually was an advertisement of mine. The very first response I received was from the Federal Trade Commission giving me a “cease and desist” order. They said it was false advertising. I responded back to them that they needed to read the entire ad. Yes, the headline was a bit misleading but in the body copy that followed I made it very clear that the 144 year age thing had not been achieved yet, but was my goal. Although I lost the argument and never ran the ad again, the point I was making was, and still is, valid.

What was the ad all about? It was about goal setting and more importantly setting goals for great health and a very long life. And think about it–you can’t prove that I won’t reach this lofty goal as long as I am still alive so as far as we’re all concerned, it’s still a possibility. I agree that hitting age 144 is not very likely, especially since no one in earth’s history has come anywhere close to that. The oldest verified person on record was Jeanne Calment of France, who made it to 122.But whether I get there or not is not the point. The point is I have a goal that is going to drive me to do the best I can.

So, you see, this goal is not about feeding some delusion but rather it is about setting a goal that acts as a constant reminder to choose paths that will move one towards that goal or at least get one close to it. The 144 year goal, for me, is a constant reminder and pointer to eat the best foods, stay physically active, read the best books on health and longevity, and hang around people that have good health goals as well.

So, that’s my message for this week. It’s a short message but I think you get it. So, regardless of how lofty they may be, why not set health and longevity goals for yourself right now!

 

The Tragedy is in Not Moving On

Tragedy is a word that none of us are fond of.  But you know what, virtually everyone on this planet has tragedy in their lives and if they haven’t had it yet, it’s almost certainly on the way. I don’t care how rich or how poor a person is, tragedy strikes everyone if they live long enough. We all were certainly shocked a few weeks ago when we saw that the loveable, talented and very successful Robin Williams had died by his own hand. This tragedy, as distant as he may be from most of us, touched so many of us nonetheless.

A couple of weeks ago, while talking to a large audience of really great people, I shared the sad, sad story of the biggest tragedy in my life–the death of my sweet, wonderful, 16 year old daughter, Kristin.  Even though that was many years ago, I’ve learned the hard way that you never get over it–that’s the bad news.  The good news is you can learn how to deal with it in a positive way.

After telling the audience about Kristin and how she died, I asked folks to raise their hands if they had has lost a child.  About 3 or 4% of the group slowly raised their hands.  I wasn’t trying to sadden the mood of the group but I was making a very important point.  That point was that if we as human beings are going to prosper and make the world a better place we must learn how to deal with tragedy since we all have or will have tragedy in our lives.

Too often I have heard people complaining and in essence saying, “Poor me. If you had gone through what I’ve been through you would not be able to do any good and great things for yourself or your family let alone strangers and other people out there.” These people are basically saying that because of their unique tragedy, their lives are over and they’ve given up because they have no choice.  If these people would step back a bit and take a look at the big picture and look beyond the facades that nearly everyone puts on, at least to a degree, they’d see that all of us are in the same boat.   And all of us really do have a choice.  We can learn how to deal with the tragedy and move on with our lives. Many times because of that tragedy we’ve had to work through, we can become better people and can be of greater help to those around us. Face the truth–tragedy strikes everyone and none of us will get out of here alive!

Think about that. And please share this message with others that you see that are in need and have not been able to move on quite yet.

« Previous Page — Next Page »