Getting Started

I wish I could say acquiring wealth was easy for me, but it wasn't.
So in response to the question "How do I start?" I offer the thought process I go through on a day-by-day basis. It really is easy to find great deals. I promise you that. It's just like riding a bike. After a little wobbling, it's a piece of cake. But when it comes to money, it's the determination to get through the wobbling that's a personal thing.
To find million-dollar "deals of a lifetime" requires us to call on our financial genius. I believe that each of us has a financial genius within us. The problem is, our financial genius lies asleep, waiting to be called upon. It lies asleep because our culture has educated us into believing that the love of money is the root of all evil. It has encouraged us to learn a profession so we can work for money, but failed to teach us how to have money work for us. It taught us not to worry about our financial future, our company or the government would take care of us when our working days are over. However, it is our children, educated in the same school system, who will end up paying for it. The message is still to work hard, earn money and spend it, and when we run short, we can always borrow more.
Unfortunately, 90 percent of the Western world subscribes to the above dogma, simply because it's easier to find a job and work for money. If you are not one of the masses, I offer you the following ten steps to awaken your financial genius. I simply offer you the steps I have personally followed.  If you want to follow some of them, great. If you don't, make up your own. Your financial genius is smart enough to develop its own list.
While in Peru, with a gold miner of 45 years, I asked him how he was so confident about finding a gold mine. He replied, "There is gold everywhere. Most people are not trained to see it."
And I would say that is true. In real estate, I can go out and in a day come up with four or five great potential deals, while the average person will go out and find nothing.  Even looking in the same neighborhood. The reason is they have not taken the time to develop their financial genius.
I offer you the following ten steps as a process to develop your God-given powers. Powers only you have control over.

1.  I NEED A REASON GREATER THAN REALITY: The power of spirit.  If you ask most people if they would like to be rich or financially free, they would say "yes." But then reality sets in. The road seems too long with too many hills to climb. It's easier to     just work for money and hand the excess over to your broker. I once met a young woman who had dreams of swimming for the U.S Olympic team. The reality was, she had to get up every morning at 4 a.m. to swim for three hours before going to school. She did not party with her friends on Saturday night.  She had to study and keep her grades up, just like everyone else.
When I asked her what compelled her with such super-human ambition and sacrifice, she simply said, "I do it for myself and the people I love. It's love that gets me over the hurdles and sacrifices."
A reason or a purpose is a combination of "wants" and "don't wants." When people ask me what my reason for wanting to be rich is, it is a combination of deep emotional "wants" and "don't wants."
I will list a few. First the "don't wants," for they create the "wants." I don't want to work all my life.  I don't want what my parents aspired for, which was job security and a house in the suburbs.  I don't like being an employee. I hated that my dad always missed my football games because he was so busy working on his career.  I hated it when my dad worked hard all his life and the government took most of what he worked for at his death. He could not even pass on what he worked so hard for when he died. The rich don't do that. They work hard and pass it on to their children.
Now the wants.  I want to be free to travel the world and live in the lifestyle I love. I want to be young when I do this. I want to simply be free. I want control over my time and my life.  I want money to work for me.
Those are my deep-seated, emotional reasons. What are yours? If they are not strong enough, then the reality of the road ahead may be greater than your reasons. I have lost money and been set back many times, but it was the deep emotional reasons that kept me standing up and going forward. I wanted to be free by age 40, but it took me until I was 4? with many learning experiences along the way.
As I said, I wish I could say it was easy. It wasn't, but it wasn't hard either. But without a strong reason or purpose, anything in life is hard.

IF YOU DO NOT HAVE A STRONG REASON, THERE IS NO SENSE READING FURTHER. IT WILL SOUND LIKE TOO MUCH WORK.

2. I CHOOSE DAILY: The power of choice. That is the main reason people want to live in a free country. We want the power to choose.
Financially, with every dollar we get in our hands, we hold the power to choose our future to be rich, poor or middle class.  Our spending habits reflect who we are.  Poor people simply have poor spending habits.
The benefit I had as a boy was that I loved playing Monopoly constantly.  Nobody told me Monopoly was only for kids, so I just kept playing the game as an adult. I also had a rich dad who pointed out to me the difference between an asset and a liability.  So a long time ago, as a little boy, I chose to be rich, and I knew that all I had to do was learn to acquire assets, real assets. My best friend, Mike, had an asset column handed to him, but he still had to choose to learn to keep it. Many rich families lose their assets in the next generation simply because there was no one trained to be a good steward over their assets.
Most people choose not to be rich. For 90 percent of the population, being rich is "too much of a hassle."  So they invent sayings that go, "I'm not interested in money."  Or "I'll never be rich." Or "I don't have to worry, I'm still young."  Or "When I make some money, then I'll think about my future."  Or "My husband/wife handles the finances." The problem with those statements is they rob the person who chooses to
 
think such thoughts of two things: one is time, which is your most precious asset, and two is learning. Just because you have no money, should not be an excuse to not learn. But that is a choice we all make daily, the choice of what we do with our time, our money and what we put in our heads. That is the power of choice. All of us have choice. I just choose to be rich, and I make that choice every day.
INVEST FIRST IN EDUCATION:  In reality, the only real asset you have is your mind, the most powerful tool we have dominion over. Just as I said about the power of choice, each of us has the choice of what we put in our brain once we're old enough. You can watch MTV all day, or read golf magazines, or go to ceramics class or a class on financial planning. You choose. Most people simply buy investments rather than
first invest in learning about investing.
A friend of mine, who is a rich woman, recently had her apartment burglarized. The thieves took her TV and VCR and left all the books she reads. And we all have that choice. Again, 90 percent of the population buys TV sets and only about 10 percent buy books on business or tapes on investments.
So what do I do? I go to seminars. I like it when they are at least two days long because I like to immerse myself in a subject. In 1973, I was watching TV and this guy came on advertising a three-day seminar on how to buy real estate for nothing down. I spent $385 and that course has made me at least $2 million, if not more. But more importantly, it bought me life. I don't have to work for the rest of my life because of that one course. I go to at least two such courses every year.
I love audio tapes. The reason: I can rewind quickly. I was listening to a tape by Peter Lynch, and he said something I completely disagreed with.  Instead of becoming arrogant and critical, I simply pushed "rewind" and I listened to that five-minute stretch of tape at least twenty times. Possibly more. But suddenly, by keeping my mind open, I understood why he said what he said. It was like magic. I felt like I had a window into the mind of one of the greatest investors of our time. I gained tremendous depth and insight into the vast resources of his education and experience.
The net result: I still have the old way I used to think, and I have Peter's way of looking at the same problem or situation. I have two thoughts instead of one.  One more way to analyze a problem or trend, and that is priceless. Today, I often say, "How would Peter Lynch do this, or Donald Trump or Warren Buffett or George Soros?" The only way I can access their vast mental power is to be humble enough to read or listen to what they have to say. Arrogant or critical people are often people with low self-esteem who are afraid of taking risks. You see, if you learn something new, you are then required to make mistakes in order to fully understand what you have learned.
If you have read this far, arrogance is not one of your problems. Arrogant people rarely read or buy tapes. Why should they? They are the center of the universe.
There are so many "intelligent" people who argue or defend when a new idea clashes with the way they think. In this case, their so-called "intelligence" combined with "arrogance" equals "ignorance". Each of us knows people who are highly educated, or believe they are smart, but their balance sheet paints a different picture. A truly intelligent person welcomes new ideas, for new ideas can add to the synergy of other accumulated ideas. Listening is more important than talking. If that was not true, God would not have given us two ears and only one mouth. Too many people think with their mouth instead of listening to absorb new ideas and possibilities. They argue instead of asking questions.
I take a long view on my wealth. I do not subscribe to the "Get rich quick" mentality most lottery players or casino gamblers have. I may go in and out of stocks, but I am long on education. If you want to fly an airplane, I advise taking lessons first. I am always shocked at people who buy stocks or real estate, but never invest in their greatest asset, their mind. Just because you bought a house or two does not make you an expert at real estate.

3. CHOOSE FRIENDS CAREFULLY: The power of association. First of all, I do not choose my friends by their financial statements. I have friends who have actually taken the vow of poverty as well as friends who earn millions every year. The point is I learn from all of them, and I consciously make the effort to learn from them.
Now I will admit that there are people I have actually sought out because they had money. But I was not after their money; I was seeking their knowledge. In some cases, these people who had money have become dear friends, but not all.
But there is one distinction that I would like to point out. I've noticed that my friends with money talk about money. And I do not mean brag. They're interested in the subject.  So I learn from them, and they learn from me. My friends, whom I know are in dire straits financially, do not like talking about money, business or investing. They often think it rude or unintellectual. So I also learn from my friends who struggle financially. I find out what not to do.
I have several friends who have generated over a billion dollars in their short lifetimes. The three of them report the same phenomenon: Their friends who have no money have never come to them to ask them how they did it. But they do come asking for one of two things, or both: 1. a loan, or 2. a job.

A WARNING: Don't listen to poor or frightened people. I have such friends, and I love them dearly, but they are the "Chicken Littles" of life.  When it comes to money, especially investments, "The sky is always falling." They can always tell you why something won't work. The problem is, people listen to them, but people who blindly accept doom-and-gloom information are also "Chicken Littles." As that old saying goes, "Chickens of a feather agree together."
If you watch CNBC, which is a goldmine of investment information, they often have a panel of so-called "experts." One expert will say the market is going to crash, and the other will say it's going to boom. If you're smart, you listen to both. Keep your mind open because both have valid points. Unfortunately, most poor people listen to "Chicken Little."
I have had more close friends try to talk me out of a deal or an investment. A few years ago, a friend told me he was excited because he found a 6 percent certificate of deposit. I told him I earn 16 percent from the state government. The next day he sent me an article about why my investment was dangerous. I have received 16 percent for years now, and he still receives 6 percent.
I would say that one of the hardest things about wealth building is to be true to yourself and be willing to not go along with the crowd. For in the market, it is usually the crowd that shows up late and is slaughtered. If a great deal is on the front page, it's too late in most instances.  Look for a new deal. As we used to say as surfers: "There is always another wave." People who hurry and catch a wave late usually are the ones who wipe out.
Smart investors don't time markets. If they miss a wave, they search
 
for the next one and get themselves in position. Why this is hard for most investors is because buying what is not popular is frightening to them. Timid investors are like sheep going along with the crowd. Or their greed gets them in when wise investors have already taken their profits and moved on. Wise investors buy an investment when it's not popular. They know their profits are made when they buy, not when they sell. They wait patiently. As I said, they do not time the market. Just like a surfer, they get in position for the next big swell.
It's all "insider trading." There are forms of insider trading that are illegal, and there are forms of insider trading that are legal. But either way, it's insider trading. The only distinction is how far away from the inside are you? The reason you want to have rich friends who are close to the inside is because that is where the money is made. It's made on information. You want to hear about the next boom, get in and get out before the next bust. I'm not saying do it illegally, but the sooner you know, the better your chances are for profits with minimal risk. That is what friends are for. And that is financial intelligence.

4. MASTER A FORMULA AND THEN LEARN A NEW ONE: The power of learning quickly. In order to make bread, every baker follows a recipe, even if it's only held in their head. The same is true for making money. That's why money is often called "dough."
Most of us have heard the saying "You are what you eat." I have a different slant on the same saying. I say, "You become what you study." In other words, be careful what you study and learn, because your mind is so powerful that you become what you put in your head. For example, if you study cooking, you then tend to cook. You become a cook. If you don't want to be a cook anymore, then you need to study something else.  Let's say, a schoolteacher. After studying teaching, you often become a teacher. And so on. Choose what you study carefully.
When it comes to money, the masses generally have one basic formula they learned in school. And that is, work for money. The formula I see that is predominant in the world is that every day millions of people get up and go to work, earn money, pay bills, balance checkbooks, buy some mutual funds and go back to work. That is the basic formula, or recipe.
If you're tired of what you're doing, or you're not making enough, it's simply a case of changing the formula via which you make money.
Years ago, when I was 26,1 took a weekend class called "How to Buy Real Estate Foreclosures." I learned a formula. The next trick was to have the discipline to actually put into action what I had learned. That is where most people stop. For three years, while working for Xerox, I spent my spare time learning to master the art of buying foreclosures. I've made several million dollars using that formula, but today, it's too slow and too many other people are doing it.
So after I mastered that formula, I went in search of other formulas. For many of the classes, I did not use the information I learned directly, 'i| but I always learned something new.
I have attended classes designed for only derivative traders, also a class for commodity option traders and a class for Chaologists. I was way out of my league, being in a room full of people with doctorates in nuclear physics and space science. Yet, I learned a lot that made my stock and real estate investing more meaningful and lucrative. Most junior colleges and community colleges have classes on financial planning and buying of traditional investments. They are great places to start.
So I always search for a faster formula. That is why, on a fairly regular basis, I make more in a day than many people will make in their lifetime.
Another side note. In today's fast-changing world, it's not so much what you know anymore that counts, because often what you know is old.  It is how fast you learn. That skill is priceless.  It's priceless in finding faster formulas-recipes, if you will, for making dough. Working hard for money is an old formula born in the day of cave men.

5. PAY YOURSELF FIRST: The power of self-discipline. If you cannot get control of yourself, do not try to get rich. You might first want to join the Marine Corps or some religious order so you can get control of yourself. It makes no sense to invest, make money and blow it. It is the lack of self-discipline that causes most lottery winners to go broke soon after winning millions.  It is the lack of self-discipline that causes people who get a raise to immediately go out and buy a new car or take a cruise.
It is difficult to say which of the ten steps is the most important.  But of all the steps, this step is probably the most difficult to master if it is not already a part of your makeup. I would venture to say that it is the lack of personal self-discipline that is the No. 1 delineating factor between the rich, the poor and the middle class.
Simply put, people who have low self-esteem and low tolerance for financial pressure can never, and I mean never, be rich. As I have said, a lesson learned from my rich dad was that "the world will push you around." The world pushes people around not because other people are bullies, but because the individual lacks internal control and discipline. People who lack internal fortitude often become victims of those who have self-discipline.
In the entrepreneur classes I teach, I constantly remind people to not focus on their product, service or widget, but to focus on developing management skills. The three most important management skills necessary to start your own business are:

1. Management of cash flow.
2. Management of people.
3. Management of personal time.

I would say, the skills to manage these three apply to anything, not just entrepreneurs. The three matter in the way you live your life as an individual, or as part of a family, a business, a charitable organization, a city or a nation.
Each of these skills is enhanced by the mastery of self discipline. I do not take the saying "pay yourself first" lightly.
The Richest Man in Babylon, by George Classen, is where the statement "pay yourself first" comes from. Millions of copies have been sold.  But while millions of people freely repeat that powerful statement, few follow the advice. As I said, financial literacy allows one to read numbers, and numbers tell the story.  By looking at a person's income statement and balance sheet, I can readily see if people who spout the words "pay yourself first" actually practice what they preach.
A picture is worth a thousand words.  So let's again compare the financial statements of people who pay themselves first against someone who doesn't.
 
People who pay themselves first

              +------------------------+
 Job--------------->|Income      |----
   ^    |-------------------------     |
   |   | Expense      |     |
                 +------------------------+    |
            +--------------------------------------<  
---------|------------------------+
|    Assets    |     Liabilities  |
|                  |                      |
|_________|____________|

Someone who pays everyone else first- Often there is nothing left

              +------------------------+
 Job--------------->|Income      |
        |-------------------------    
      | Expense      | ----> Nothing left!
                 +------------------------+   
-----------------------------------+
|    Assets    |     Liabilities  |
|                  |                      |
|_________|____________|

Study the diagrams and notice if you can pick up some distinctions.  Again, it has to do with understanding cash flow, which tells the story. Most people look at the numbers and miss the story. If you can truly begin to understand the power of cash flow, you will soon realize what is wrong with the picture on the next page, or why 90 percent of most people work hard all their lives and need government support like Social Security when they are no longer able to work.
Do you see it? The diagram above reflects the actions of an individual who chooses to pay himself first. Each month, they allocate money to their asset column before they pay their monthly expenses. Although millions of people have read Classen's book and understand the words "pay yourself first," in reality they pay themselves last.
Now I can hear the howls from those of you who sincerely believe in paying your bills first. And I can hear............