CREATING WEALTH BOOT CAMP: How To Change The Way You Think About Making Money At Home By Ron Taylor Please Steal This Book Well, not quite. You are free to give this book away, or resell it, as you wish. However, the entire text must be left intact. Copyright 2007 XOR Career Guides All Rights Reserved. No part may be duplicated or distributed without express written permission. This report is an original creation of XOR Career Guides, and is not a part of any affiliate or associate distribution plan. Rights to distribution of this report should not be implied or conferred. Information in this report should not be construed as legal or accounting advice. Keywords: business, success, wealth, money, finance, rich, investments, real estate, stock. This report is for information use only and is not intended to provide investment advice. Concepts and ideas depicted in this report should be used at the reader’s discretion. Use due diligence in all of your investment decisions. For More Money Making Ideas, Visit: http://www.5grandmonthly.com 1 “Wealth to us is not mere material for vainglory but an opportunity for achievement; and poverty we think it no disgrace to acknowledge but a real degradation to make no effort to overcome.” Thucydides Wealth in America As a lifelong entrepreneur, I have learned that following a few basic principles can dramatically increase your probability of achieving success. A principle is a basic truth or law, which cannot be refuted by opinion, personal bias, or peer pressure. Principles also tend to come off as preachy, so bear with me; and remember, entrepreneurs are usually thick skinned and responsive to advice that may benefit them. Welcome to the Creating Wealth Boot Camp Newsletter! You can subscribe to my free weekly newsletter by sending a blank email to wealthbootcamp-subscribe@yahoogroups.com. Or, you can do a search at Yahoo Groups for Creating Wealth Boot Camp. For More Money Making Ideas, Visit: http://www.5grandmonthly.com 2 It's almost a cliche. The image of military boot camp as a living nightmare has been immortalized by countless Hollywood productions and oft retold war stories by military veterans. From my own experience I can tell you, boot camp can be a living nightmare. And that's how I feel about poverty and living paycheck to paycheck it's a living nightmare. What's worse, is that it doesn't have to be that way. We live in the best of times, and the economic opportunities available to us today are light years ahead of what our parents experienced. Look around. Find an opportunity that matches your personal interests, skills, and income goals, and then give it your 100% best effort. Financial success in your own home business may be just around the corner. But you don't have to take my word for it. Read some books by people like Robert Kiyosaki, David Bach, Suze Orman, and Steve Scott. They will all tell you the same thing: "To get ahead in life, you need to own your own business." Ron Taylor Making Massive Amounts of Money on the Net www.5grandmonthly.com Achieving wealth in America is not about how much you earn, but how wisely you use what you earn. This report is aimed at helping you to both increase your income, and manage your money properly. Among other things, you will learn that spending more For More Money Making Ideas, Visit: http://www.5grandmonthly.com 3 than you earn in an effort to impress friends and neighbors with your material possessions is a recipe for financial disaster. Additionally, lacking the patience to invest for the long-term, develop action oriented goal statements, and failing to protect yourself with proper insurance and legal advice, are all indicators of poor financial management. Again, it’s not what you earn, but what you do with it that matters. Popular opinion has taught us that wealth and success comes to those who are lucky, or cheats. I hope this report will show you that this is not true. One standard measurement of wealth is a six-figure income, which pertains to the number of digits in your annual income. A six-figure income equals anything above $100,000. According to the U.S. Census Bureau, in 2004, the number of households with income between $100,000 and $149,999 exceeded 11 million, 3.5 million American households had income between $150,000 and $199,999, 1.3 million households had incomes between $200,000 and $249,999, and 1.7 million households had income above $250,000 per year. Unfortunately, the wealth of America cannot simply be measured by income. According to an article written by David Francis and published in the May 23, 2005 edition of Christian Science Monito , nearly 20% of American households have either zero net worth, or actually owe more than they are worth. Furthermore, according to Francis, 25% of American households do not have sufficient cash reserves or other assets to support themselves above the r For More Money Making Ideas, Visit: http://www.5grandmonthly.com 4 poverty line for three months, and 33% of households do not even have an active bank account. What ever happened to the land of opportunity? Americans are killing themselves with uncontrolled spending, easy credit, and a complete lack of budgeting or saving skills. So how does one measure wealth? And, when does a person know if he or she has achieved “wealth?” For the purposes of this report, wealth is defined as an income level derived from passive sources that allows you to live without depnding on a job. Passive sources are any income source that throws off a positive cash flow, that you can bank or spend. For example, the cash left over from a rental property after all expenses are paid, is passive income. Likewise, interest from a certificate of deposit, or dividends from stock investments, are examples of passive income. With this definition in mind, the key to creating wealth is to figure out how to create and build passive income sources. To measure my progress in this area, I use a simple formula: Passive income/total living expenses = wealth quotient Consider this example: If you had $1,200 per month in passive income from a real estate investment and your cash savings account, and $4,500 in monthly expenses to survive (house payment, household expenses, etc), your wealth quotient equals: 1,200/4,500 = .26 For More Money Making Ideas, Visit: http://www.5grandmonthly.com 5 The ideal is to achieve a quotient of 1 or greater. The number .26 represents approximately one quarter of your desired quotient of 1 or greater. Change the numbers and watch what happens: 3,000/4,500 = .66 4,500/4,500 = 1 6,000/4,500 = 1.33 The key to long term financial success is to build passive income, and free yourself from the need to work or “earn” a living. In my opinion, when your wealth quotient reaches 1, you have achieved wealth. The rest is simply a matter of how much margin for safety and extra luxuries you wish to obtain. Keep in mind that passive and portfolio income is typically earned from fully insured and maintained real estate that provides a positive cash flow, bonds and savings, dividends from Blue Chip stocks, and royalties from books, patents, and music you may own the rights to. These rights to intellectual property, combined with the equity in real estate owned and various certificates of deposit, stocks, and bonds compsrises what is known as you capital base. As your capital base grows, you are able to generate greater amounts of passive and portfolio income (PPI). When your PPI exceeds your basic living expenses, you have achieved a level of wealth that enables you to make riskier investments in the pursuit of higher yields and return on investment (ROI). The key here, which is a lesson I learned from both “The Richest Man in Babylon” and the school of hard knocks, is not to erode For More Money Making Ideas, Visit: http://www.5grandmonthly.com 6 your capital base by making risky investments or spending the money that makes up the foundation to your wealth building aspirations. As my rough sketches illustrate, you should use only the proceeds above and beyond your basic living expenses (derived from your capital base) to make wealth building investments and/or purchase the goodies in life. If you violate this rule and consistently dip into your capital, you will need to keep your day job to feed your consumption habits. I am not in any way advocating a Spartan lifestyle—after all, the pursuit of wealth is only worthwhile if you are allowed to enjoy a higher quality of life for yourself and your family. The basic tenet of this report is that you should carefully manage your money to ensure your investment and wealth building goals are heading in the right direction. In the short term this may mean cutting back on the niceties, but the rewards later on will allow you to enjoy the good things in life above and beyond the norm. Robert Allen makes this point perfectly clear in his book, “Nothing Down,” where he compares your pursuit of wealth to a rocket ship leaving earth towards space. In the early stages, just after liftoff, your progress is slow and awkward, but as you gain experience and continue to build your capital base, your rocketship gains speed until it begins to break free of the earth’s gravitational pull. Allen’s analogy is a great lesson in wealth building and is well worth reading. Again, this concept is vitally important to your acquisition of wealth. Follow the steps of creating multiple streams of income that ideally throw off positive cashflow to your hip pocket with For More Money Making Ideas, Visit: http://www.5grandmonthly.com 7 minimal effort. These streams of income typically should come from interest from savings accounts, dividends from bond and stock investments, royalties from intellectual properties (copyrights, patents, and trademarks), and rental income from real estate owned. Use this positve cashflow to offset your living expenses, then use the excess (income above and beyond your living expenses) to feed your investment activities. When your wealth quotient exceeds 1, you have achieved a moderate level of wealth. Other definitions of wealth consider income, where an annual income equal to or greater than 1 million dollars constitutes wealth. Using the net worth criteria alone, 3% of American households qualify as “wealthy.” According to recent studies of millionaires in America, most millionaires (million dollar net worth) live by modest means, drive non-luxury cars, and do not own luxury homes. Wealthy Americans are generally professionals such as attorneys, surgeons, and scientists, with the entrepreneurial group gaining ground. A great book to read on this subject is The Millionaire Next Door, by Thomas J. Stanley and William D. Danko. Various consumer watch groups and the U.S. Census Bureau estimate there were 8.2 million millionaire households in the United States in 2003, much of which was realized through high home values. Robert Kiyosaki does not allow the inclusion of personal residences in his calculations of net worth in his Rich Dad, Poor Dad book series, preferring to limit such calculations to investment property, liquid assets, and businesses owned or controlled. For More Money Making Ideas, Visit: http://www.5grandmonthly.com 8 Using his definiiton of wealth, the number of milionaire status households in America would be significantly lower. Use the tables below to find where you fit in the overall scheme of wealth and income in America, based on your age and ethnicity. While comparisons of such numbers mean little on the individual level, it is interesting to see where you fit. Median Income of Households by Selected Characteristics Characteristic Number (thousands) Median income All households 113,146 $44,389 Type of household Family households 77,010 55,327 Married-couple families 58,109 63,813 Female householder, no husband present 14,009 29,826 Male householder, no wife present 4,893 44,923 Nonfamily households 36,136 26,176 Female householder 19,792 21,797 Male householder 16,344 31,967 Race and Hispanic origin of householder White 92,702 46,697 Non-Hispanic 81,445 48,977 Black 13,792 $30,134 Asian and Pacific Islander4,140 57,518 Hispanic origin 12,181 34,241 Age of householder 15–24 6,686 27,586 For More Money Making Ideas, Visit: http://www.5grandmonthly.com 9 25–34 19,255 45,485 35–44 23,226 56,785 Age of householder Number (thousands) Median income 45–54 23,370 61,111 55–64 17,476 50,400 65 and over 23,135 24,509 Wealth, Warren Buffett Style Warren Buffett once stated “It is easier to create money than it is to spend it.” The operative word in this statement is his use of the word “create.” By create, Buffett does not mean to make or earn money. Creating wealth is not about getting a second job or negotiating a pay raise, although these things can certainly help in the beginning stages of wealth building. Creating wealth is about finding ways to preserve the money you do earn, putting it to proper use, and learning how to develop income sources from outside your normal day job, as discussed in the section above. Warren Buffett created his billion-dollar empire by investing in companies and adding value to their product or service. As a beginning wealth builder you can similarly add value to the enterprises you undertake by producing a better product, marketing your services more effectively, and making wise investments in real estate, stocks, bonds, and intellectual properties. For More Money Making Ideas, Visit: http://www.5grandmonthly.com 10 [...]... money to build businesses, support charities, and enjoy life You could argue that the wealthy were lucky enough to be born into a wealthy family, but the statistics state otherwise Only 15% of the wealthy households in America attribute their wealth to inheritances That means 85% of the wealthy population earned their wealth through hard work, wise investments, and successful businesses In a sense they... business owners have proven themselves through a keen awareness of how persistence, patience, and promotion can build a cash machine Creating Wealthy Habits One of the wealthiest men in America, John Jacob Astor, once stated, Wealth is largely a result of habit.” Astor created his wealth during the Industrial Revolution, yet his message as just as true today as it was then In my opinion, Astor’s quote may... “doodads” in his book Rich Dad, Poor Dad Wealth Killers: Failing to recognize or acknowledge the power of the Internet to help you create additional income, and squandering your hard-earned money on things or recreational activities that provide instant gratification while ignoring the long-term implications of not investing for the future Wealthy people make creating wealth a priority in their lives They... you will need along the way (which you will pay for in the form of interest and dividends), the process of creating personal wealth is a solitary one Nobody cares about your finances quite as much as you Nobody will hand you an empire And nobody will sell you a thriving business Creating personal wealth is up to you For More Money Making Ideas, Visit: http://www.5grandmonthly.com 11 It’s up to you to... achieve financial wealth you need to take an objective look at your habits Are you in the habit of spending more than you earn? Or, are you in the habit of tucking a piece of each paycheck into a savings account or investment? The habit of saving is the bedrock to financial success, so much so that W Clement Stone claimed your ability to save is a prerequisite to creating personal wealth For More Money... and think about how important it is to be in the game if you expect to win For More Money Making Ideas, Visit: http://www.5grandmonthly.com 20 Four Trends That Can Make You Wealthy The wealthiest people in the world acquired their wealth through a careful recognition and exploitation of a major trend For example, Bill Gates took advantage of the birth of personal computers and made billions by marketing... means, we are too broke to quit our jobs The first step in the wealth building process is the most difficult Spending less than you earn is an obstacle to success, and in my experience, trashes the dreams of more wealth builders than anything else Quite simply, if you cannot control your spending habits, you do not have the potential to achieve wealth short of winning the lottery, landing a mega-millions... business is about learning how to play the game, getting involved, and never quitting You can subscribe to my free weekly newsletter by sending a blank email to wealthbootcamp-subscribe@yahoogroups.com Or, you can do a search at Yahoo Groups for Creating Wealth Boot Camp Ron Taylor Making Massive Amounts of Money on the Net www.5grandmonthly.com For More Money Making Ideas, Visit: http://www.5grandmonthly.com... big, but to also think in terms of small successes repeated over and over Again, if you can make a hundred bucks doing something within your current capabilities and resources, could you repeat it? Creating wealth can be that simple Donald Trump is an excellent example of this numbers game While he came from a long line of successful entrepreneurs, Trump can be considered a self-made billionaire In his... http://www.5grandmonthly.com 21 Fourth, people around the world have become more concerned with their health There is a current trend to spend more money on natural or organic foods, and quality supplements In my opinion, creating wealth has never been easier for people willing and able to recognize and capitalize on these four trends Find an Internet, home-based business that addresses the needs of older adults, and you’ll . build a cash machine. Creating Wealthy Habits One of the wealthiest men in America, John Jacob Astor, once stated, Wealth is largely a result. how does one measure wealth? And, when does a person know if he or she has achieved wealth? ” For the purposes of this report, wealth is defined as an